18 Share Tips – 7th July 2025

Welcome to this week’s edition of 18 Share Tips – our weekly selection of top ASX shares, chosen by leading analysts, that we think are worth considering.

This week Peter Day of Sequoia Wealth Management , Toby Grimm of Baker Young and Tony Paterno of Ord Minnett share their ‘Buy’, ‘Hold’ and ‘Sell’ recommendations.

Please note these share tips are simply recommendations and are in no way intended as financial advice.  These share tips are general advice and don’t take into account any individual’s financial situation. Investors are advised to seek professional financial advice before investing.

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Peter Day, Sequoia Wealth Management

BUY RECOMMENDATIONS

BUY – Xero (XRO)

XRO is a global accounting software provider. It recently entered into a binding agreement to acquire 100 per cent of Melio and its associated entities for an upfront consideration of $US2.5 billion ($A3.9 billion) in cash and Xero scrip. Melio, a US business-to-business payments platform, generated revenue of $US153 million in fiscal year 2025. We expect the acquisition to expand Xero’s distribution capabilities via Melio’s platform. Access to new customers reinforces further brand investment potential.

BUY – Amcor PLC (AMC)  

There’s analyst speculation Amcor is considering asset sales following its merger with Berry Global. Asset sales could potentially improve margins and growth prospects. Asset sales could also lower gearing. We expect this packaging giant to deliver adjusted earnings per share of between US72 cents and US74 cents in fiscal year 2025. We also expect the company to grow earnings per share over next three years, with Berry synergies acting as the key driver.

HOLD RECOMMENDATIONS

HOLD – Audinate Group (AD8)

AD8 develops and supplies digital audio visual networking solutions to the professional audio visual industry. AD8 recently announced it had entered into a binding agreement to acquire Iris Studio Inc for a total consideration of up to $US28 million. In our view, this acquisition broadens AD8’s video offering, while accelerating the ability to create an interoperable AV platform, which are two key areas of potential growth.

HOLD – BlueScope Steel (BSL)

BlueScope is an international supplier of steel products mostly in the building and construction markets. We have raised our earnings forecasts on higher US steel price forecasts. US tariffs are enabling higher US steel prices, but questions remain as to duration and efficacy. Our US economists note that US consumer sentiment remains at low levels, as they’re concerned about business, employment and income conditions. Moderating US house prices is also seen as an early warning for a broader slowing in the US economy. We retain a neutral rating.

SELL RECOMMENDATIONS

SELL – Lynas Rare Earths (LYC)

Lynas is the only significant rare earths producer outside China. Apart from the Lynas Mt Weld mine in Western Australia, Lynas also operates a rare earths processing plant in Kalgoorlie and another in Malaysia. We see a limited near-term earnings contribution from production. Gross sales revenue of $123 million in the third quarter of fiscal year 2025 was down from $141.2 million in the second quarter. Third quarter sales revenue in 2025 was up from $101.2 million in the prior corresponding period. We have downgraded LYC on valuation grounds. The shares have risen from $6.53 on January 2 to trade at $8.41 on July 3. Investors may want to consider cashing in some gains.

SELL – Fletcher Building (FBU)

Fletcher is a building products manufacturer. It’s also a home builder. The company operates in New Zealand and Australia. The company reported a net loss after tax of $NZ134 million in the first half of fiscal year 2025 compared to a net loss after tax of $NZ120 million in the prior corresponding period. Group revenue from continuing operations was down 7 per cent. The company has shelved dividends to focus on paying down debt. The company expects total significant items to range between $NZ573 million and $NZ781 million for fiscal year 2025. We hold an underperform recommendation in response to mostly negative catalysts.

Toby Grimm, Baker Young

BUY RECOMMENDATIONS

BUY – NextDC (NXT)

Australia’s largest data centre developer has entered into a binding agreement for a new $2.2 billion debt funding package to accelerate growth. The maturity date for the new debt facilities is December 3, 2030. While the use of debt increases risk, demand for artificial intelligence and data warehousing are structural tailwinds, which appear highly resilient. Using debt signals management’s confidence in continuing to attract growth, underpinning its international expansion. The company has been enjoying favourable momentum, with the shares increasing from $10.08 on April 9 to trade at $14.17 on July 3.

BUY – SiteMinder (SDR)

This accommodation services provider has continued to retain customers and deliver revenue growth, highlighting the value of its software products through the macroeconomic cycle. Fears of a cyclical downturn have seen SDR shares fall from $6.37 on February 25 to trade at $4.435 on July 3. The stock has arguably been subjected to end of financial year tax loss selling, creating an attractive buying opportunity.

HOLD RECOMMENDATIONS

HOLD – PWR Holdings (PWH)

This cooling technologies developer faces a pivotal period, with potentially larger Formula 1 contracts due to the entrance of a new team in 2026 and changing engine specifications. Also, the transition to new manufacturing facilities in Australia, which disrupted operations in fiscal year 2025, offer scale and efficiency benefits. Successful execution in these departments, alongside progress in aviation, defence, batteries and electronics should flow through to an improving share price.

HOLD – Silex Systems (SLX)

Within six months, Silex and partner Cameco Corporation aim to complete a key US pilot test (TRL-6) to validate its efficient laser uranium enrichment technology. It’s seeking approval for a full-scale production facility in the US state of Kentucky, with land and a 30-year uranium feedstock agreement already secured. While numerous technology, development and regulatory risks remain, the rejuvenation of nuclear energy demand and US energy security factors appear highly advantageous.

SELL RECOMMENDATIONS

SELL – Virgin Australia Holdings (VGN)

Australia’s second largest airline recently enjoyed a successful ASX float, assisted by clever capital structuring and a 15 per cent plunge in global crude oil prices on the first two days of trading. However, the domestic airline industry has enjoyed a particularly favourable environment with limited capacity growth amid strong demand, factors we believe are likely to unwind in time, making the current valuation difficult to sustain. Shares in the initial public offering were priced at $2.90 a share. The shares listed on June 24 and closed at $3.34 on June 25. The stock has since retreated to trade at $3 on July 3.

SELL – Insurance Australia Group (IAG)

The insurance giant has recently enjoyed ideal operating conditions with relatively low competition, strong premium increases at a time of subdued claims and rising interest returns on reserves. Undoubtedly, this mix is good for as long as it lasts, but we see far more scope for deterioration than improvement and would be looking to lock in the healthy profits made to date. The shares have risen from $7.31 on April 7 to trade at $8.54 on July 3.

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Tony Paterno, Ord Minnett

BUY RECOMMENDATIONS

BUY – Aussie Broadband (ABB)

ABB is the fifth largest broadband services provider in Australia. Aussie Broadband’s investor day confirmed near-term earnings momentum has remained positive, and expectations for longer term earnings per share growth above 20 per cent per annum are realistic. The company added more than 24,000 net connections in the third quarter of fiscal year 2025, up 29 per cent on the prior corresponding period. The company is well positioned to grow residential market share as the NBN upgrades customer speeds. Evidence of sustainable top line growth is a major positive catalyst.

BUY – Whitehaven Coal (WHC)

We recently visited WHC’s metallurgical coal mines in Queensland. Management has made good progress in improving productivity, which gives us confidence the company will meet our growth forecasts amid decreasing unit costs. We expect this to drive strong underlying free cash flow in fiscal year 2026, despite recent softness in coal markets. The recent discount to our fair value estimate provides an attractive entry point for investors with a positive view on the medium term outlook for metallurgical coal.

HOLD RECOMMENDATIONS

HOLD – Technology One (TNE)

TNE is a large enterprise software company with locations across six countries. The company’s transition to a software-as-a-service operating model in October 2022 continues to deliver results from new contract wins, including the Islington London Borough Council. Annual recurring revenue in the United Kingdom was up 50 per cent in the first half of fiscal year 2025 when compared to the prior corresponding period. Total annual recurring revenue was up 21 per cent. Profit after tax was up 31 per cent. The company has upgraded full year profit growth to between 13 per cent and 17 per cent.

HOLD – Sigma Healthcare (SIG)

Sigma and Chemist Warehouse merged in February 2025. Prior to the merge, Chemist Warehouse’s first half 2025 trading update highlighted continuing robust operating momentum, with like-for-like sales up 10.3 per cent. Chemist Warehouse opened 19 new stores. The company posted strong earnings before interest and tax margins underpinned by robust sales growth, new supply agreements and efficiencies in operating expenditure. We retain a positive stance on the quality of the Chemist Warehouse business, but downgrade Sigma to a hold on valuation grounds.

SELL RECOMMENDATIONS

SELL – HUB24 (HUB)

HUB24 operates an investment and superannuation platform. The company has performed strongly. Platform funds under administration (FUA) rose to $102.5 billion at the end of third quarter of fiscal year 2025, up 29 per cent on the prior corresponding period. FUA for portfolio, administration and reporting services rose 6 per cent to $21.6 billion. The share price has risen from $46.98 on July 4, 2024, to trade at $88.49 on July 3, 2025. We remain strong supporters of the HUB business, but given the share price appreciation, we believe our positive investment thesis is factored into the current valuation.

SELL – Netwealth Group (NWL)

Netwealth operates a wealth management business, offering superannuation and investment administration platforms. Netwealth will continue to benefit from changes in market structure that are driving an increasing uptake of specialist investment platforms over in-house administration systems. However, platform operators should be viewed as market cyclicals, where fund flows and funds under administration metrics, including valuation multiples, are inextricably linked to broader market sentiment. NWL shares have risen from $22.17 on April 7 to trade at $33.64 on July 3. Given the rapid rise, investors may want to consider cashing in some gains at these levels.

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The above recommendations are general advice and don’t take into account any individual’s objectives, financial situation or needs. Investors are advised to seek their own professional advice before investing. Please note that TheBull.com.au simply publishes broker recommendations on this page. The publication of these recommendations does not in any way constitute a recommendation on the part of TheBull.com.au. You should seek professional advice before making any investment decisions.