Why brokers just revised their outlook for these 4 top ASX All Ords shares

Four leading ASX All Ords shares just earned broker re-rates.

Some for the better.

Some for the worse.

This could explain why some of the ASX All Ords shares are outperforming the All Ordinaries Index (ASX: XAO)’s 0.6% intraday gains, while some are decidedly lagging.

So, without further ado, here are the four companies in question.

(Broker data courtesy of The Australian.)

ASX All Ords stocks getting broker downgrades

The first company getting a broker re-rate today is iron ore miner Rio Tinto Ltd (ASX: RIO).

The Rio Tinto share price is up 2.5% today at $135.46 a share. This sees the ASX All Ords share up 24% over 12 months.

Following on that strong run, Citi doesn’t believe there’s much more upside ahead for the Rio Tinto share price over the coming year.

The broker cut its rating to ‘neutral’. Although Citi left its target price for Rio Tinto shares unchanged at $137.00, which still represents a potential upside of 1.4% from current levels. Not to mention the 4.8% fully franked trailing dividend yield.

According to Citi’s Paul McTaggart, the mining giant is no longer trading at a “deep discount to valuation” following on the big share price surge.

McTaggart also isn’t convinced China’s new stimulus measures are enough to rekindle its struggling property sector and materially boost iron ore demand.

According to McTaggart (quoted by The Australian):

While the recent Politburo meeting pledged to support the property sector through supply and inventory management to stabilise house price and sales, Citi thinks this is unlikely to stimulate incremental steel demand.

Furthermore, China steel mills are now loss-making again, and we are heading into a period of seasonal weakness for mining equities.

Also getting downgraded today is jewellery retailer Michael Hill International Ltd (ASX: MHJ).

The Michael Hill share price is down a painful 20% today to 50 cents per share following a disappointing trading update released after market close on Friday. The company reported its sales margins remain under more pressure than management had anticipated.

This profit warning saw Citi cut the ASX All Ords share to a ‘neutral’ rating and reduce its target price by 21% to 68 cents a share. Notably, that’s 36% above the current level.

Commenting on the trading update, Citi’s James Wang said:

Further, the absence of comments about any recent improvement makes us cautious on the outlook. Ongoing gross margin weakness also raises questions around the effectiveness and sustainability of the brand elevation strategy.

Michael Hill shares are down 51% over 12 months.

Two shares with brightened outlooks

On the other side of the ledger, ASX All Ords share Pointsbet Holdings Ltd (ASX: PBH) was just raised to an ‘overweight’ rating by JP Morgan.

The Pointsbet share price is up 11% today at 51 cents.

The strong run, and broker upgrade, follow on this morning’s announcement of boosted FY 2024 earnings guidance for the sports betting company.

The ASX All Ords share lifted the forecast for its normalised earnings before interest, taxes, depreciation and amortisation (EBITDA) loss for the full year to the range of $4 million to $6 million. That’s up from the prior guidance of a full-year EBITDA loss of $9 million to $14 million.

Which brings us to the fourth ASX All Ords share getting a broker re-rate today, bank stock Bendigo and Adelaide Bank Ltd (ASX: BEN).

The Bendigo share price is up 1.4% today at $10.88 a share.

Following on Friday’s trading update, Citi has increased its price target by 9% to $9.25 a share. Which tells me the broker expects some headwinds for the bank stock ahead. Though less than it previously expected.

Among the positive metrics Bendigo Bank reported on Friday was an increase in its net interest margins (NIMs) over the 10-month period.

Bendigo Bank’s NIM post revenue share arrangements was 1.87%, up from 1.83% reported in 1H FY 2024.

The ASX All Ords share has gained 26% over 12 months.

The post Why brokers just revised their outlook for these 4 top ASX All Ords shares appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended JPMorgan Chase and PointsBet. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.