News SummaryDJ Australian Equities Roundup -- Market Talk31 Oct 2022 15:18:522 Views0355 GMT - ResMed's 1Q non-Americas device revenue fell short of that expected by Macquarie analysts but not by enough to shift their positive view of the stock. The breathing tech company's rest-of-the-world device revenue shrank by about 18% on year compared with the 13% drop anticipated by Macquarie. The analysts say in a note to clients that device output should improve sequentially over the remainder of FY 2023, which they view as supportive to performance. Their forecasts for the coming quarters imply improved earnings growth, helped by lower assumed freight costs in 2H. Macquarie maintains an outperform rating on the stock and trims the target price 2.5% to A$37.75. Shares are flat at A$33.91. (stuart.condie@wsj.com; @StuartLCondie)

0308 GMT - Macquarie is unlikely to see any meaningful FY 2023 consensus upgrades following the company's 1H FY 2023 results, says JPMorgan analyst Andrew Triggs in a note. The investment bank however, has raised its FY 2023 net profit after tax forecast by 2.0%, which JPM reckons will be relatively straightforward to hit unless there is significant market dislocation. JPM notes that FY 2023 earnings strength will likely be driven by the commodities and global markets unit, and it expects it to remain well placed to profit from ongoing energy market transition which is driving higher volatility. JPM retains its overweight rating. (alice.uribe@wsj.com)

0055 GMT - It looks like the prices of Iluka's core mineral-sands products--zircon, rutile and synthetic rutile--have peaked, says Citi analyst Paul McTaggart, as he cuts target price on the stock by 22% to A$9.50/share and downgrades his rating to neutral from buy. "There's now evidence of slowing demand in both zircon and pigments," he says. While there's value in owning Iluka, investors are likely to sit on the sidelines while they wait out any downturn in demand and pricing, says McTaggart. "Further, we expect rare-earths capex will limit dividend payments in CY23/24," he says. Iluka is up 2.4% at A$8.65/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0050 GMT - Judo's operational update for 1Q FY 2023 shows that loan impairments remain low, but that may change in 2H FY 2023, Citi analysts say in a note. The investment bank reckons that economic conditions may change in 2H given higher interest rates and the likely slowdown of economic activity, which prompts it to expect that the Australian small-business lender's loan impairments will drift higher. Citi thinks that the low level of impaired assets in 1Q, at just 0.14%, may result in lower 1H FY 2023 bad and doubtful debt expenses, and higher cash earnings. Citi has a buy rating on the stock, which is last up 1.3% at A$1.19. (alice.uribe@wsj.com)

0051 GMT - Jumbo Interactive can grow total transaction value by an average 22% annually through FY 2025 thanks to its growing share of digital lottery sales and recent acquisitions in the charity sector, Wilsons analyst Ben Wilson says. He initiates coverage of the stock with an overweight recommendation, pointing to the resilience of lotteries across economic cycles. Jumbo's core business is as an online reseller of Australian national draw lottery tickets, via its 10-year agreement with The Lottery Corporation. Wilson is unconcerned by Jumbo's weak 1Q, which he attributes a lack of large jackpots. These are variable and results should normalize, he adds. Wilsons has a A$17.50 target price on the stock, which is up 2.95% at A$13.59. (stuart.condie@wsj.com; @StuartLCondie)

0035 GMT - Macquarie's commodities revenue has held up amid a dislocation in the energy market, but Citi analysts say in a note that this may be challenged by a range of factors including reduced gas price volatility, slowing growth, and government intervention designed to minimize volatility. "We think commodities revenues decline from a peak of A$3.6 billion in FY 2023 to A$3 billion in FY 2024," Citi says. It sees such headwinds in Macquarie's markets facing units, will likely offset better conditions in its annuity units. Still, Citi leaves its earnings forecasts largely unchanged, with higher commodities revenues offset by lower asset realizations and higher costs. It retains target price at A$172. Macquarie is up 1.7% to A$169.35.(alice.uribe@wsj.com)

0018 GMT - ARB Corp.'s 1Q performance was weaker than expected by Macquarie analysts, who nonetheless remain confident in the Australian auto-parts supplier's medium-term prospects. They tell clients in a note that ARB is well-positioned thanks to strategic partnerships, new product development, an expanding store network, and its distribution and manufacturing capacity. The analysts point out that ARB's orderbook remains strong both in Australia and for exports, even against a softening macro environment. Macquarie cuts the stock's target price 16% to A$30.00 but maintains an outperform rating. Shares are up 6.6% at A$28.76. (stuart.condie@wsj.com; @StuartLCondie)

2341 GMT - The foundations look to be in place for an improved franchise performance from Westpac, but progress will likely be gradual, say Morgan Stanley analysts in a note. It forecasts 2H FY 2022 Australian housing and business loan growth of 1.5% and 3.5% half-on-half, respectively. But for next year, MS forecasts growth of just 1.0% and 3.0% year-over-year, respectively. For the Australian major lender's upcoming earnings, MS forecasts 2H FY 2022 pre-provision profit of A$5.30 billion and cash profit ex-notable items of A$3.43 billion, versus consensus of A$5.03 billion and A$3.34 billion, respectively. "We think investors now expect earnings to beat consensus," MS says.(alice.uribe@wsj.com)

2335 GMT - International workers insurance remains the highest margin product in the Australian overseas health insurance market, reversing long term market trends, say Macquarie analysts in a note. In an analysis of the investment bank's annual survey of the overseas health insurance market for students and workers, it finds that NIB's workers product is one of the cheapest amongst major insurers, while the students' product is slightly below average. Open borders are supporting NIB's rebound in its international inbound health insurance unit volumes, while investment income and slow claims catch-up in its Australian residents health insurance unit remain favorable, Macquarie says. It remains neutral on the stock.(alice.uribe@wsj.com)

Cost overruns and lost Australian mortgage market share are two points of concerns for ANZ's investment case, says UBS analyst John Storey in a note. With respect to costs, he reckons that the market has partially adjusted to this new paradigm against the backdrop of wage inflation pressures. UBS also thinks that ANZ has the potential to face deposit-pricing pressures and asset-quality concerns in its New Zealand business. Still, the investment bank stays buy rated on ANZ, viewing the Australian major lender as an inexpensive play on Australian rate gearing and remains positive on the stock. (alice.uribe@wsj.com)

(END) Dow Jones Newswires