0353 GMT - ANZ keeps its bear at Morgan Stanley on the earnings headwinds hitting the Australian bank over the next couple of years. Analyst Richard E. Wiles reckons that migration and integration costs for the lender's ANZ Plus platform and its Suncorp Bank acquisition will be higher over the near-term. Meaningful financial benefits from the investment are unlikely until fiscal 2027, he adds. Wiles tells clients in a note that ANZ may have to offer retail customers higher rates on its digital account to encourage migration. MS raises its target price 1.1% to A$27.80 and keeps an underweight rating on the stock, which is down 0.4% at A$32.00. ([email protected])
0254 GMT - Web Travel's new bears at Morgan Stanley worry that the Australian travel-booking company's weaker earnings outlook is becoming permanent. The investment bank's analysts tell clients in a note that Web Travel has progressively ratcheted down its earnings ambitions since 2022. The company's latest trading update is now seen by the MS team as a downgrade to its long-term earnings potential. The analysts point out that shares have de-rated, but they still see risk weighted to the downside. MS cuts its target price by 47% to A$3.70 and lowers its recommendation to underweight from equal-weight. Shares are down 0.9% at A$4.30. ([email protected])
0122 GMT - Incitec Pivot's more definitive plans to separate its fertilizers arm is a positive, says RBC Capital Markets in a note. The explosives and chemicals maker's stock is up 1.0% at A$3.13/share. Otherwise, its FY numbers, including EBIT, are in line with expectations, RBC says. The "result quality looks poor," though, it adds, highlighting cashflow conversion around 54% and A$712 million in one-off items. RBC has an outperform rating and A$3.60 target on the stock. ([email protected]; @RhiannonHoyle)
0032 GMT - REA's 1Q performance looks very strong to Goldman Sachs analysts, who cite the Australian real-estate advertiser's market leadership as they reiterate a buy rating on the stock. They point out in a note to clients that REA's confidence that it can deliver double-digit buy-yield growth over the next five years contrasts with the challenges faced by smaller rival Domain. The analysts gain extra confidence in the News Corp.-controlled company's short-term performance from the fact that it has upgraded its listings-volumes expectations, from flat to 1% annual growth. GS lifts its target price 2% to A$249.00. Shares are up 0.4% at A$235.16. News Corp. owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal. ([email protected])
0021 GMT - Stockland outperforms Australia's S&P/ASX 200 index early on Monday after upgrading its earnings view and residential settlement target for FY 2025. Stockland rises by 1.6% to A$5.12, compared to a 0.3% fall by the benchmark equities index. Stockland now expects funds from operations/security of A$0.33-A$0.34 in FY 2025 after factoring in a A$1.06 billion deal for 12 residential communities from Lendlease. That is up from prior FFO guidance of A$0.32-A$0.33/security after tax. Citi says the new guidance is in line with its expectation of 33.9 Australian cents, and consensus forecasts of 33.5 Australian cents. "So we believe this may already been built into consensus expectations, but nonetheless is a move in the positive direction, as it confirms the strong EPS growth outlook for Stockland," Citi says. ([email protected]; @dwinningWSJ)
0014 GMT - Qube Holdings' trading update emphasizes that debt management is its focus right now, says RBC Capital Markets. The owner of Patrick ports had gearing of 27.2% at the end of June. Gearing is expected to reach the middle of Qube's 30%-40% target range during FY 2025. Qube is targeting A$180 million-A$250 million of asset sales, with the bulk of proceeds coming in late FY 2025 and early FY 2026. "We also highlight the possibility of a Patrick Terminals transaction which adds another dynamic to Qube's leverage and earnings growth outlook for FY 2025," says analyst Owen Birrell. RBC has a sector-perform call on Qube and A$4.10/share price target. Qube is up 0.5% at A$3.83. ([email protected]; @dwinningWSJ)
0010 GMT - REA's bull at Bell Potter says the News Corp.-controlled advertiser has further entrenched its leadership position with Australia's real-estate audience. Analyst Michael Ardrey says that vendors increasingly prioritize the platform over its main rival, with uptake of premium products driving ongoing strength in the company's buy yield. Confidence among property sellers continues to underpin a positive operating environment despite elevated interest rates, he tells clients in a note. Bell Potter keeps a buy rating on the stock and lifts its target price 7.9% to A$258.00. Shares are down 0.1% at A$233.92. News Corp. owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal. ([email protected])
2350 GMT - ANZ's bear at Macquarie reckons that the Australian bank cannot sustain its current dividend yield. Macquarie's analysts tell clients in a note that a payout ratio of 60%-65% looks sustainable, compared with ANZ's FY 2024 ratio of about 75%. They point out that ANZ isn't the only bank in this position, with its Australian peers also looking expensive and channeling an unsustainable amount of earnings into dividends. They add that ANZ is likely to continue trading at a significant discount to rivals Westpac and NAB due to risks surrounding its tech migration and the integration of its Suncorp Bank acquisition. Macquarie keeps an underperform rating and A$26.50 target price on the stock, which is up 0.9% at A$32.415. ([email protected])
2259 GMT - Infomedia's guidance downgrade catches RBC Capital Markets off guard. Infomedia says it now expects revenue of A$142 million-A$149 million in FY 2025, below earlier guidance of A$145 million-A$154 million. Analyst Garry Sherriff says the downgrade appears to be driven by the loss of SimplePart as a customer. Infomedia estimates this churn will have a A$4 million impact on annual recurring revenue. "However, (we) are surprised given that the possibility of a customer loss was flagged during the FY 2024 earnings call and press release," RBC says. ([email protected]; @dwinningWSJ)
2213 GMT - For oOh!media investors waiting on the re-tendering of a contract with Auckland Transport, Jefferies thinks no news is not good news. Analyst John Campbell points out there has been no announcement on the contract even though it appeared to close several months ago. The contract, which is due to expire on Jan. 1, represents some 4% of FY 2024 revenue, Jefferies says. "Our forecasts continue to assume the contract is renewed with oOh!media (at a lower margin) but acknowledge that the longer we go without hearing, the greater the risk," the bank says. If the contract is lost then that would drive an around 6% EPS downgrade, Jefferies adds. It retains a buy call on oOh!media. ([email protected]; @dwinningWSJ)
(END) Dow Jones Newswires