There are a lot of options on the Australian share market for investors to choose from.
To help narrow things down, let's see what analysts at Morgans are saying about the three named below.
Are they buys, holds, or sells? Here's what you need to know:
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Clinuvel Pharmaceuticals Ltd (ASX: CUV)
Morgans notes that this biopharmaceutical company's Scenesse product is facing a major challenge following the release of top line data from a competitor.
In response, the broker has downgraded Clinuvel's shares to a trim rating with a reduced price target of $7.00. It said:
CUV competitor Disc's oral bitopertin swept its EPP Ph3 and is raising US$350m to launch. Its topline data is stronger than Scenesse's pivotal package on cross-trial comparison. Our main concern of a daily tablet supported by stronger data is the scenario we've long flagged as the biggest threat to CUV's only revenue line.
We now view EPP as a defensive franchise. As a result, we have cut US volume and pricing assumptions. We move to a TRIM rating and reduce our target price to A$7p/s (from A$10 p/s).
NextDC Ltd (ASX: NXT)
Morgans thinks that NextDC shares are looking undervalued following a selloff this week.
While the news about M3 was disappointing, the broker sees an opportunity to buy shares while they are "incredibly cheap".
As a result, Morgans has upgraded NextDC shares to a buy rating with a $7.50 price target. It commented:
NXT have downgraded FY27 EBITDA guidance by ~36% due to M3 power supplier Jemena deferring the increased power supply for M3 due in part to community and stakeholder opposition (aka the Not In My BackYard movement). NXT's share price is below Net Tangible Asset value of ~$7.50 p/share. This pessimism implies concerns around contagion. Management didn't share investor concerns, saying M3 power is now expected to arrive "in FY28" and noting, in the context of debt, they are "in compliance with financial covenants".
In our view NXT is incredibly cheap and its ~30% discount to NTA is unwarranted if these issues are just short term in nature. However, management needs to de-risk these key concerns for equity investors. This could take some time. We set our Target Price at $7.50 which is broadly in line with NTA and below our valuation. We upgrade to a BUY recommendation, from HOLD. Noting the heightening risks relative to normal operating conditions for the business.
Sigma Healthcare Ltd (ASX: SIG)
The broker is feeling positive about Chemist Warehouse owner Sigma Healthcare following its annual general meeting update.
Following the event, the broker has retained its buy rating on Sigma Healthcare's shares with a $3.19 price target. It said:
At its AGM, SIG provided a solid trading update where domestic LFL sales were in line with consensus at ~+10% and international LFL sales at +15.8% were ahead of consensus. The potential selldown by the co-founders (~5% of issued capital, as disclosed in SIG's July ASX announcement) may be keeping a lid on the share price.
However, we see this as an opportunity to add to positions in this quality healthcare/retail name. We have made immaterial changes to our forecasts (<1%). We forecast ~18% EPS CAGR over the next three years. We retain our BUY recommendation with a $3.19 price target.
