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Citi insights: Bluescope Steel, Mirvac, Xero performance analysis

EditorOliver Gray
Published 28/05/2024, 04:06 pm
© Reuters - Citi Group's recent analyst note provided a detailed look into various sectors and companies on the Australian stock exchange, offering valuable insights into their performance and potential future trajectory.

Bluescope Steel Ltd (ASX:BSL), despite facing short-term headwinds, is expected to maintain a neutral stance due to lower steel prices and potential infrastructural spending in the US. The company's target price has been reduced slightly to $24.00.

Fletcher Building Ltd (ASX:FBU) has attracted attention due to recent press reports suggesting private equity interest. However, despite seeming undervalued compared to historical and earnings data, a closer examination reveals the stock trading at a premium to reported and adjusted NTA.

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Imdex Ltd (ASX:IMD) saw a surge in junior financings in April, surpassing the US$1bn mark. However, Citi Group analysts believe an uplift in exploration from juniors could still be more than 12 months away due to several factors including high interest rates, regulatory headwinds, and drill rig availability.

Mirvac Group (ASX:MGR) is predicted to face a potential third consecutive year of earnings decline in FY25, driven by various factors such as lower apartment completions and commercial development profits. However, due to its exposure to the residential market, the stock maintains a neutral rating.

Nufarm Ltd (ASX:NUF) is grappling with uncertainty around pricing recovery. Overcapacity in China and industry-wide destocking are among the challenges that could delay a significant price uptick. The company has been downgraded to neutral, with a target price trimmed to A$4.80 per share.

Xero Ltd (ASX:XRO) experienced strong exit growth rate post FY24 results, despite concerns about slowing subscription growth. The company is expected to accelerate R&D spending in FY25, driven by subscription and ARPU growth over the medium term. The company maintains a buy rating, with a new target price of $158.2.

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