0008 GMT - Speculation of a higher-than-anticipated Samarco settlement for miner BHP is spooking investors. But Macquarie analysts, who have an outperform rating on BHP's stock, reckon softening macro conditions in Brazil may help to counter any bigger-than-expected settlement and keep BHP from needing to materially change its provision related to the 2015 dam disaster. "Our review of BHP's $6.5 billion provision indicates favorable FX and Brazilian 10-year bond yields may drive a [circa] 20% favorable move in the provision," based on an estimated settlement of 127 billion Brazilian reais, say the analysts. "All things equal, BHP may be able to accommodate a higher 167 billion [Brazilian reais] settlement in Brazil under a similar cash flow profile without having to materially increase its provision." BHP is down 1.8% at A$42.21. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2351 GMT - Macquarie reckons the likelihood of BHP quickly making another bid for Anglo American--once a six-month standstill ends next month--is low given its rival's ongoing restructuring. "We think BHP will remain patient on M&A," analysts at the bank say in a note. They view BHP as being focused on its organic copper growth options. "If executed well, it retains optionality to acquire assets should valuations permit," the analysts say. Macquarie has an outperform rating on BHP and says it prefers the world No. 1 miner over rival Rio Tinto, citing asset quality. It keeps a A$44.00/share target. BHP is down 1.8% at A$42.22/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2344 GMT - Perpetual's bulls at Jarden are intrigued by comments from new CEO Bernard Reilly that the investment manager can exceed its current cost targets. The broker's analysts point out that while Perpetual has reiterated its A$25 million-A$35 million annual cost-savings target, CEO Bernard Reilly says the company "can go further." Reilly is just six weeks into his role, they tell clients in a note. Perpetual's September funds under management were slightly stronger than the Jarden analysts had anticipated. Jarden lifts its target price 1.6% to A$22.70 and keeps an overweight recommendation on the stock, which is at A$19.65 ahead of the open. (stuart.condie@wsj.com)

2327 GMT - ResMed's bull at Macquarie will be listening for any management on new mask launches and detail on revenue growth guidance when the breathing-tech supplier announces its 1Q result. Macquarie's analysts tell clients in a note that they will be looking for clarity on ResMed's guidance for "high single-digit" revenue growth over the next five years. They forecast 1Q revenue of US$1.196 billion and a gross margin of 59.2%, both slightly ahead of the average analyst forecast. Macquarie raises its target price 4.3%, to A$37.80, on slight EPS forecast revisions and a valuation roll-forward. They keep an "outperform" rating on the stock. Shares are up 0.7%, at A$35.70. (stuart.condie@wsj.com)

2256 GMT - Balance sheet risks that have cast a cloud over Australian energy company Santos are likely to ease from here, reckons Jarden. That's because "the end of the investment tunnel" is in sight, analyst Nik Burns says. Santos's gearing is set to peak above the upper end of its target gearing range, given ongoing capital commitments for its Barossa natural-gas project in Australia and Pikka oil project in Alaska. But those projects will transform Santos's free cash flow once they come online. "We see greater returns and upside from Santos once the market starts to factor in the future free cash flow potential but it would add an extra element of risk for investors if commodity prices did suddenly fall," Jarden says. It retains an overweight call on the stock. (david.winning@wsj.com; @dwinningWSJ)

2253 GMT - ARB Corp's slightly soft 1Q update doesn't shift Wilsons analysts' bullish view of the auto-accessory manufacturer and retailer. The analysts tell clients in a note that various growth drivers across both product and distribution give them confidence that sales growth will accelerate through the rest of ARB's 2025 fiscal year, while Oct. 1 price increases will benefit margins. In short, ARB continues to look well placed to take advantage of the market's structural shift toward 4WD vehicles. Wilsons rolls forward its valuation and lifts target price 5.1% to A$50.27. It keeps an overweight recommendation on the stock, which is at A$43.15 ahead of the open. (stuart.condie@wsj.com)

2252 GMT - Australian energy company Santos's investor day next month should be positive, says Macquarie. It expects Santos to provide favorable 2025 guidance, forecasting a 6% rise in production and a 35%-40% drop in capex even as it decommissions more facilities. It's hopeful about news of cost-cutting and a better definition of shareholder returns that could see dividend payouts increase. Macquarie also says that a merger between Woodside and Santos, which was discussed by the companies last year, now makes more sense than it did back then. (david.winning@wsj.com; @dwinningWSJ)

2241 GMT - OFX keeps its bull at Wilsons despite the international payments provider's surprise guidance cut. The broker's analysts tell clients in a note that, while the reduction in net-operating income guidance on the back of what looks like a tough September is disappointing, the revised guidance seems conservative and designed to avoid further downgrades. They cut their Ebitda forecasts by 12% for fiscal 2025, by 12% for fiscal 2026, and by 10% for fiscal 2027. Target price falls 19% to A$2.11 but Wilsons stays overweight on the stock. Shares are at A$1.465 ahead of the open. (stuart.condie@wsj.com)

2231 GMT - De Grey Mining's revelation that permitting for its Hemi gold project is taking slightly longer than expected disappoints Euroz Hartleys, but the bank doesn't see any significant risk that it won't get the green light. De Grey says full approval from Australia's government is now likely to come some time between January and March. That compared to analyst Michael Scantlebury's prior expectation of the current quarter. "We believe that the Federal approval is viewed by the market, but more importantly international corporates, as a key catalyst before making a potential takeover offer," Euroz Hartleys says. (david.winning@wsj.com; @dwinningWSJ)

2227 GMT - Jarden analysts tell clients that there are "few surprises" in Australia-based vintner Treasury Wine's recent trading update, reiterating their bullish call on the company's stock. They say Treasury's business mix is looking good as it is increasingly skewed to luxury wine brands which are growing. They also expect the planned sale of the company's lower priced commercial portfolio to deliver a net positive cash flow outcome. "The business has medium-term multiple upside via the commercial sale, China re-entry (demand needs to lift) and U.S. growth outlook," the analysts say. They see Treasury's stock rising to A$14.10, from yesterday's close of A$11.73. (mike.cherney@wsj.com; @Mike_Cherney)

2218 GMT - AIC Mines's shares are down some 46% from their May peak, and Jefferies thinks they have been oversold. Analyst Daniel Roden rates AIC Mines a buy, noting that its 1Q production and 2Q guidance beat expectations, although the miner still underperformed its peers. "Lower valuations also prohibit near-term M&A, in our view," Jefferies says. That means management is likely to focus more on developing its Eloise and Jericho operation to expand production beyond the current 20,000 tons/year target over a 5-10 year period, the bank adds. "AIC maintains a strong balance sheet, and continues to provide safe, quality exposure to the copper thematic at relatively attractive valuations," Jefferies says. (david.winning@wsj.com; @dwinningWSJ)

2148 GMT - To avoid an equity raise, casino operator Star Entertainment needs to find A$400 million in funding on top of the A$300 million that it expects to raise from asset sales, Jefferies says. That would lower gearing to 2x net debt-to-Ebitda, from 4x in FY 2027 if the asset sales happen. "Given gearing levels, Star may be forced to contemplate significant strategic decisions such as a divestment of Queen's Wharf Brisbane equity or other key assets, which we expect would come with their own regulatory hurdles," analyst Kai Erman says. Jefferies has an underperform call on Star. (david.winning@wsj.com; @dwinningWSJ)

1200 ET - Global alumina supply is likely to stay tight while prices rise, Alcoa CEO William Oplinger tells analysts on a call. He says competitors in Northern Australia, Jamaica and India were struck by force majeure disruptions that were beyond their control in the past year--while Alcoa reported a decrease in alumina production in 3Q after curtailing its Kwinana, Australia facility. Oplinger says the following has to happen for alumina supply to come into balance: "Those disruptions need to be cleared up and not recur. And secondly, we're going to need to see growth in Indonesia and India." (jasmine.li@wsj.com)

0501 GMT - Deals by Amazon.com to back nuclear-power projects across the U.S. are fanning uranium mining stocks Down Under. Uranium demand is forecast by Canaccord Genuity to rise roughly 3.5% a year to 2035 from traditional reactors. "However, big tech could supercharge this," Canaccord analysts say in a note. Paladin Energy is up 10% at A$12.97/share. Boss Energy is up 6.1% at A$3.63/share. Deep Yellow rises 8.0% to A$1.55/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

(END) Dow Jones Newswires

October 18, 2024 00:02 ET (04:02 GMT)