0350 GMT - Australian major banks reset expectations for FY23 expense growth last year, so there is likely to be little risk of surprises in the upcoming 1H reporting season covering ANZ, Westpac and NAB, says Morgan Stanley analysts in a note.The investment bank sees that Westpac's "cost reset" plan will once again be in focus, and it expects the lender todeliver modest cost reduction, with no change to its FY24 targets. Overall, MS thinks that banks will likely report strong half-on-half margin expansion in 1H, but forecasts an average margin decline of 8 bps on year in FY24, as the benefit of higher rates fades and lenders look to protect market share as loan and deposit growth slows. (alice.uribe@wsj.com)

0220 GMT - Pre-provision profit at the three major Australian banks--ANZ, Westpac and NAB--reporting 1H FY 2023 earnings are likely to rise by an average of 18% half-on-half, say Morgan Stanley analysts in a note. But, they reckon that earnings tailwinds are likely coming to an end, as margins peak, loan growth moderates, costs rise and loan losses bottom. "In our view, the tailwinds that drove an earnings per share upgrade cycle over the past year have run their course, and earnings will peak in 1H FY 2023," the investment bank says. MS sees ANZ as likely to deliver the best result relative to expectations in 1H of 2023, and MS's pre-provision profit estimate is around 2% above consensus. (alice.uribe@wsj.com)

0206 GMT - Bank of Queensland is likely to meet its guidance for FY 2023 positive jaws, a ratio comparing income to expenses, but its pre-provision profit is expected to decline around 10% next year, Morgan Stanley analysts say in a note. The Australian regional lender last week previewed its 1H FY 2023 earnings. MS says the lender's cash profit of A$256 million is 6.5% below its forecasts and 2.5% under consensus. The investment bank lowers its cash earnings per share forecasts by around 4.5% for FY 2023, and around 3.5% for FY 2024. "We note that investors won't know the reasons for the 1H earnings miss or have a clearer picture of operating trends until the result is released Thursday," says MS.(alice.uribe@wsj.com)

0157 GMT - Corporate Travel Management's latest large contract win highlights the strength of the Australian travel-services provider's U.K. business and its reputation with that country's government, UBS analyst Tim Plumbe says. Plumbe tells clients in a note that he is raising his EPS forecasts for both FY 2024 and FY 2025 by 2% on the back of the contract, but says that this is conservative. The EPS upside could be as much as 10-13% if there are no offsetting factors, he says. UBS lifts its target price by 3.4% to A$25.95 and maintains a buy rating on the stock, which is down 0.8% at A$21.44. Performance through June will be an important indicator of the momentum of the underlying business, Plumbe adds. (stuart.condie@wsj.com; @StuartLCondie)

0143 GMT - Sigma Pharmaceuticals' FY23 result suggests that the Australian wholesaler is continuing to lose market share, Morgan Stanley analysts say in a note. They say Sigma's 7% revenue growth for the six months through January compares unfavorably with that at more diversified rival Ebos, which posted 18% growth in community pharmacy revenue for the six months through December. Sigma's FY24 earnings guidance range is between 22% and 34% lower than MS had previously forecast, prompting the investment bank to cut its EPS forecasts by 53% for FY24 and by 48% for FY25. MS stays underweight on the stock and cuts its target price by 12% to A$0.38. Shares are down 2.8% at A$0.685. (stuart.condie@wsj.com; @StuartLCondie)

0131 GMT - Bank of Queensland faces range of challenges that makes Morgans cautious on the stock, analyst Nathan Lead says. In a note, Lead says these include investor's risk aversion to smaller banks during a run of offshore bank issues and heading into a weaker economic environment, as well as an asset base concentrated on the highly competitive home-lending market. Morgans also thinks the Australian regional lender has tech disadvantages compared to the major banks, as well as a lack of clarity on the financial benefit of the transition toward digital banking. Morgans downgrades the stock to hold from add, and cuts its target 39% to A$6.75. BOQ is down 0.9% at A$6.38. (alice.uribe@wsj.com)

0115 GMT - Australian banks have made no deposit rate changes over the last few weeks, which means that fortnightly movement in spreads is purely a function of bill rates, say Goldman Sachs analysts Andrew Lyons and John Li in a note. They analyzed data from GS's product pricing database to provide an update on product profitability, and what that means for sector margins. GS expects overall deposit spreads will remain a half-on-half net interest margin tailwind in 1H, but note that recently acquired mortgage customer, or front book, spreads peaked in October, and imply a NIM headwind into 2H, while mortgage spreads remain pressured. (alice.uribe@wsj.com)

0057 GMT - Bank of Queensland's higher exposure to housing and its more rate-sensitive deposit base leaves it more exposed to the industry-wide trends hurting net interest margins than its peers, Goldman Sachs' analysts Andrew Lyons and John Li say in a note. At the same time, GS reckons its expenses are likely to stay under pressure amid inflation and headwinds from running legacy systems along with building a new digital bank. The Australian regional lender last week announced a number of one-off items that will affect its 1H FY 2023 results, and some other key elements. GS moves its 1H cash EPS forecasts in line with BOQ's guidance, and as a result cuts the stock's target 0.7% to A$7.16. BOQ falls 0.3% to A$6.41. (alice.uribe@wsj.com)

0033 GMT - GQG's performance history and recent flows relative to listed peers warrant a premium multiple for the asset manager, say Macquarie analysts in a note. In its March funds under management update, GQG reported FUM of $94.5 billion, up 7.4% quarter-over-quarter and 4.1% higher on month. For 1Q FY 2023, GQG delivered net inflows of $5 billion, up $0.9 billion on the prior quarter, and $2 billion of which were in the month of March. Even so, Macquarie notes that GQG cautioned against extrapolating these flows as there may have been a 1Q seasonality. Macquarie forecasts inflows of $5.5 billion for the remaining months of 2023, and has an outperform call on the stock.(alice.uribe@wsj.com)

0012 GMT - Beach Energy's earnings outlook dims slightly after the company failed to commission one of the pipelines connecting some of the Thylacine wells to the Otway gas plant in Victoria, according to UBS. In a note, analyst Tom Allen assumes a six-month delay to 50% of the 60 terajoules/day of incremental production from the Thylacine field. It now assumes the Otway gas plant will reach nameplate capacity in the June quarter of 2024. "Importantly, we do not believe Beach is exposed to financial penalties under its Lattice Gas Sales Agreement with Origin Energy for the delay," UBS says. It cuts its FY 2024-2025 EPS forecasts for the company by 5%. (david.winning@wsj.com; @dwinningWSJ)

2345 GMT - Major bank competition drove Australian Finance Group's home loan lodgement moderation in the March quarter which also hit earnings, say Macquarie analysts in a note. For that quarter, overall loans was A$19.4 billion in lodgements which tracked below A$20 billion for the first time in eight quarters. "Lodgement mix continued to shift away from the higher margin AFG Home Loan product," Macquarie says. "Competition in the prime segment from major banks, supported by bank deposit franchises, drove a shift in share towards banks." Macquarie retains a neutral call on the stock, and reckons that confidence in earnings should increase as competition moderates. (alice.uribe@wsj.com)

2326 GMT - Hansen Technologies' people-intensive business model means that the Australian billing and customer-information system provider's margins are probably as wide as they're going to get, Goldman Sachs analysts say in a note. Initiating coverage of the stock with a neutral rating, GS says Hansen's mature business model, stable customer base and relatively modest levels of R&D support above-average profit margins compared to peers. They see further upside as unlikely, suggesting that inflation and other costs could push earnings margins to about 30% from low-mid 30s currently. GS places a A$5.20 target price on the stock, which last traded at A$4.57. (stuart.condie@wsj.com; @StuartLCondie)

2324 GMT - Australian fund manager Magellan's retail outflows are likely to persist at current levels until there is a sustained improvement in performance, say Macquarie analysts in a note. But, they reckon that institutional outflows are likely to be less material going forward, with the most material risk being more mandate losses from Australian equities. For March, Magellan saw net outflows of A$3.9 billion, comprised of A$500 million in retail outflows, and A$3.4 billion in institutional outflows which related to Australian equities. Macquarie forecasts A$2.9 billion of outflows in 4Q of FY 2023, made up of A$1.5 billion in institutional and A$1.4 billion in retail. The investment bank reckons recent improvements in performance will need to be sustained for at least 3-6 months before Magellan may see a rerating. Macquarie has a neutral call on the stock. (alice.uribe@wsj.com)

2310 GMT - Major Australian banks are unlikely to see net interest margins pushed into a downward trajectory when cash rate tightening ends, even amid high levels of mortgage competition, say Citi analysts in a note. There has been increased concern across the market due to ongoing aggressive mortgage pricing, with some executives commenting that pricing was below the cost of capital, they add. Citi reckons that the mortgage drag on NIMs is likely to subside partly due to the fact that new loan volumes have declined, led by new mortgage sales, and that the number of new mortgage accounts have fallen by around 30% reducing impact of new cashback offers. ANZ is still Citi's top pick in the sector, as it has less NIM sensitivity due to comparatively lower levels of Australian mortgages. (alice.uribe@wsj.com)

2306 GMT - Corporate Travel Management's announcement of a material U.K. government contract solidifies the Australian travel agent's position in the government contract space, Goldman Sachs analysts say. They tell clients in a note that the contract win demonstrates a strong track record to potential customers, while government contracts also offer downside earnings support against the backdrop of an uncertain macro environment. Corporate Travel Management's growth outlook is ahead of historical levels but the stock is trading at a 10% discount to its average historical price-to-earnings ratio, they say. GS lifts its target price 14% to A$22.60 and maintains a buy rating on the stock, which last traded at A$21.62. (stuart.condie@wsj.com; @StuartLCondie)

2258 GMT - Ramelius Resources's all-scrip takeover offer for Breaker Resources looks a little opportunistic to Bell Potter, even though it has been recommended by the gold miner's board. In a note, analyst David Coates notes that Breaker had a cash balance of A$77.3 million at the end of 2022 following the sale of its 20% stake in the Manna lithium deposit. "At a share price of A$0.28/share this equated to a market capitalization of A$91 million, an enterprise value of A$13.9 million and an enterprise value per resource ounce valuation metric of just A$8.27/oz," he says. "At this time, Breaker's enterprise value effectively dropped from A$52.9 million to A$14.2 million, creating the opportunity for Ramelius." (david.winning@wsj.com; @dwinningWSJ)

2231 GMT - Australia's construction industry looks to be headed for a painful but arguably necessary correction that will affect the entire value chain despite the optics of a bulging pipeline of work, says Jefferies. In a note, analyst Simon Thackray says developers have two problems. Firstly, they must find a builder with the financial or operational capacity to take on more work, Jefferies says. Then they need to get that work done in a timeframe and at a cost that doesn't make the development uneconomic. "Due diligence by both developers and contractors is expected to increase substantially in the current industry setup which will extend delivery time frames," Jefferies says. "Industry consolidation is not necessarily the answer where getting bigger does not always equate to getting better." (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires