{"id":484202,"date":"2026-06-18T20:08:14","date_gmt":"2026-06-18T20:08:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/484202\/"},"modified":"2026-06-18T20:08:14","modified_gmt":"2026-06-18T20:08:14","slug":"stock-takes-after-the-iran-deal-will-the-new-zealand-sharemarket-get-back-on-track","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/484202\/","title":{"rendered":"Stock Takes: After the Iran deal, will the New Zealand sharemarket get back on track?"},"content":{"rendered":"
\u201cAnecdotal reports from companies regarding their trading were very good and then the end of March and then through April and May saw the economy hit something of a brick wall.\u201d<\/p>\n
Can New Zealand regain its former growth path?<\/p>\n
\u201cThe fundamentals for that are still there,\u201d Goodson said.<\/p>\n
\u201cWe still have a terms-of-trade boom which has strengthened, and we still have relatively loose monetary policy, although the curve has priced in plenty of tightening,\u201d he said.<\/p>\n
Iran aside, Goodson said a potential stumbling block is the New Zealand general election, due on November 7.<\/p>\n
\u201cNormally activity has a little pause before an election, given the uncertainty.\u201d<\/p>\n
He said much would depend on how business and consumer confidence surveys pan out in the post-Iran ceasefire environment and on the August reporting season.<\/p>\n
On a roll?<\/p>\n
Is the famously volatile a2 Milk on a roll again?<\/p>\n
Earlier this month, the dual-listed dairy and infant formula company\u2019s shares were trading down at $6.30 from a year-to-date high of $11.84, prompting a \u201cplease explain\u201d inquiry from the ASX.<\/p>\n
In a response dated June 1, a2 Milk said equities analyst CLSA Australia had issued a downgrade recommendation, citing uncertainty relating to supply delays and external factors as disclosed by a2 Milk back in mid-April.<\/p>\n
In that announcement, a2 Milk talked of supply chain problems at its supplier, Synlait Milk, and a \u201csignificant\u201d backlog of unfilled purchase orders.<\/p>\n
Then in May, a2 Milk\u2019s shares were sold down again after the company said it had started a voluntary recall of three batches of a2 Platinum US label infant milk formula because of the presence of the toxin cereulide.<\/p>\n
By late last week, the company\u2019s share price looked to have turned a corner, which one fund manager said was most likely on the back of a report from sharebroking firm Jarden suggesting a2 Milk could be through the worst.<\/p>\n
The Jarden report said a key investor fear since the US voluntary product recall was whether it would spread to China, a2\u2019s biggest market.<\/p>\n
But the analysts took some comfort that as time has passed, no further issues have needed to be notified to the market.<\/p>\n
\u201cThere remain lots of unanswered questions regarding the a2 Milk investment case \u2013 residual tail risk of product recall and\/or supply chain issues and catch-up progress raising the downside risk to second half 2026 estimates, and the opening guidance for 2027 at the August result,\u201d Jarden said.<\/p>\n
\u201cThat said, we acknowledge some of this risk and the benefit of time passing to reduce initial cereulide tail risk is now better reflected in the material share price de-rate.\u201d<\/p>\n
Against that background, Jarden upgraded its recommendation to \u201cneutral\u201d from \u201cunderweight\u201d.<\/p>\n
The stock was trading at around $7.38 on Thursday.<\/p>\n
Craigs Investment Partners, in its analysis, said a2 Milk\u2019s stock position was improving, but that it was probably too late to save the June 2026 financial year.<\/p>\n
After also incorporating lower birth rates, Craigs downgraded its 2027 financial year forecast to a net profit of $207 million \u2013 15% below the market consensus of $245m.<\/p>\n
While the first half of 2027 will be tough, the risk was less because of a2 Milk\u2019s lower share price, it said.<\/p>\n
\u201cA2 Milk\u2019s brand remains healthy and the company\u2019s strategy to broaden its product range and insource manufacturing should underpin solid sales growth and margin improvement over the medium term,\u201d Craigs said.<\/p>\n
\u201cA2 Milk\u2019s fortress balance sheet and imminent special dividend also appeals.\u201d<\/p>\n
On that basis, Craigs upgraded a2 Milk to overweight, with a price target of $8.98.<\/p>\n
SkyCity to outperform?<\/p>\n
SkyCity\u2019s share price has been languishing at lower levels for some time now, but brokers Forsyth Barr said it would soon be in a position to deliver strong cashflow.<\/p>\n
\u201cSkyCity should be a highly cash-generative business, though its track record over the past decade has been underwhelming,\u201d Forsyth Barr said.<\/p>\n
\u201cLarge capital-intensive projects consumed more than half of the $2.5 billion of the operating cashflow generated since 2015 while also delivering disappointing shareholder outcomes.<\/p>\n
\u201cHowever, the phase of elevated growth capex is now over and despite significant industry changes, we think SkyCity can return to delivering strong free cashflow (FCF).<\/p>\n
\u201cWith this level of FCF generation, we estimate that SkyCity can support a double-digit cash dividend yield in 2028, while retaining significant residual FCF for other capital initiatives.<\/p>\n
\u201cWe recognise there are risks around execution of balance sheet initiatives and continued earnings volatility in Auckland and Adelaide.<\/p>\n
\u201cHowever, at about 0.33 times net asset value, we continue to see a highly compelling risk\u2013reward.”<\/p>\n
The broker has an \u201coutperform\u201d recommendation on the stock, which has rallied from 48c last week to 54c late this week.<\/p>\n
Precinct sale<\/p>\n
Forsyth Barr said Precinct Properties\u2019 move to sell a 50% interest in the PwC Tower to its existing capital partner, PAG, was a good outcome and has rated the stock as \u201coutperform\u201d.<\/p>\n
Precinct had been seeking a joint venture partner on the asset for the last 12 months.<\/p>\n
Among other things, Forsyth Barr said the deal would give Precinct greater balance sheet headroom and provided flexibility for strategic initiatives.<\/p>\n
\u201cThe search for a capital partner for 256 Queen St student accommodation continues, and Precinct has engaged a contractor to better scope costs for the Downtown Carpark project, but a capital partner is unlikely until the development is further derisked,\u201d Forsyth Barr said.<\/p>\n
\u201cWe continue to view Precinct\u2019s premium portfolio and strong gross yield as attractive,\u201d the broker said.<\/p>\n
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.<\/p>\n