URGENT UPDATE: In a significant shift, shares of Codan Ltd (ASX: CDA), Bravura Solutions Ltd (ASX: BVS), and Lovisa Holdings Ltd (ASX: LOV) have been downgraded from outperform to neutral by Macquarie Group Ltd (ASX: MQG) following the latest earnings reports. This news, just confirmed today, has immediate implications for investors closely monitoring these stocks.
These three companies, all part of the S&P/ASX All Ordinaries Index (ASX: XAO), have recently been highlighted in Macquarie’s Emerging Leaders Reporting season wrap. The downgrades come at a time when investor sentiment is critical, and the impact on share prices is expected to be significant.
Codan has seen remarkable growth this year, with shares surging 91% year-to-date. The company reported a 23% increase in revenue compared to the previous year, outpacing expectations with an organic growth rate of 19%, well above management’s target of 10-15%. Despite this success, Macquarie has set a price target of $27.15 on Codan shares, prompting a neutral rating due to the recent price surge above this target.
In stark contrast, Bravura Solutions has struggled, with shares dropping approximately 10% this year. The stock recently plummeted 16% following disappointing FY25 results. Macquarie noted that while recurring revenue remains stable at around 60% of underlying revenue, the company faces a significant challenge from a major customer exit, which will result in a projected revenue loss of approximately A$5 million for FY26. The price target for Bravura is set at $2.03, aligning closely with current trading levels.
Meanwhile, Lovisa has emerged as a notable recovery story, with shares soaring 100% since April 7, 2023. The company reported a strong 14.2% growth in sales for FY25, driven by 1.7% like-for-like growth and an aggressive expansion strategy that included the opening of 131 new stores, bringing its total global footprint to 1,031 stores. Macquarie has set a price target of $40.90 for Lovisa, but the shares are currently trading at $41.93, justifying a neutral rating.
Investors are urged to watch these developments closely as market reactions unfold. The downgrades by Macquarie could lead to increased volatility in the coming days, making this a critical time for stakeholders in these companies.
Stay tuned for further updates as this situation evolves.
