0443 GMT - Universal Store's weaker-than-expected FY 2023 sales guidance suggests momentum in the fashion retailer's core franchise has slowed materially despite the supposed resilience of its younger consumers, Citi analysts say in a note. They say social-media analysis has indicated weaker consumer engagement with the Thrills clothing sold by Universal Store, and reckon that sales may have been boosted by wholesale arrangements that may not be in the brand's long-term interest. Citi cuts its FY 2023 and FY 2024 EPS forecasts by 18% and 20%, respectively, and lowers its target price by 42% to A$3.34. It stays neutral on the stock, which is up 0.3% at A$3.16. (stuart.condie@wsj.com; @StuartLCondie)

0426 GMT - Webjet's strong FY 2023 result supports improved Ebitda forecasts by Citi analysts, but questions remain about how long the Australian travel agent can sustain its current growth. Ebitda of A$134 million was about 8% ahead of the average analyst forecast and largely driven by Webjet's B2B unit. There's a chance that this is as good as it gets for B2B, the Citi analysts warn clients in a note, but also observe that longer business trips are helping offset falling prices. They upgrade their FY 2024 and FY 2025 Ebitda forecasts by 11% and 7%, respectively. Citi raises its target price by 22% to A$8.80 and maintains a buy rating on the stock, which is up 0.3% at A$7.605. (stuart.condie@wsj.com; @StuartLCondie)

0353 GMT - Switching between Australian private health insurers remains steady on an industry level, but this could change with affordability pressures rising, says Citi analyst Nigel Pittaway in a note. Switching could also increase as premiums rise, something that is set to occur in 2H 2023. Data from regulators for the March quarter shows that lapse rates have nudged up again to 9.4% on a rolling 12-month basis, Citi notes. It adds that Medibank's suggestion that it lost 1,300 policyholders in between the December and March quarters could be one of the factors contributing to the small rise in industry lapse rates. (alice.uribe@wsj.com)

0328 GMT - Optus's weakening mobile subscriber growth suggests competitors are probably still taking market share following the Singtel-owned company's high-profile data breach back in September 2022, UBS analysts say. They point out that Optus added 121,000 net subscribers in 2H, compared with 304,000 in 1H. Its customer churn rate also increased from 1.2% in 1H to 1.5% in 2H, they say in a note. Mobile average-revenue-per-user was broadly flat from 1H to 2H despite price rises, which the UBS analysts suggest indicates discounting while rivals TPG and Telstra raise their prices. (stuart.condie@wsj.com; @StuartLCondie)

0310 GMT - Eagers Automotive's references to broad-based cost pressure in its trading update have caught the attention of Wilsons analysts, who point out that this is somewhat at odds with the car dealership group's recent trend of effective cost control. The comments aren't a big concern and don't drastically affect their opinion that Eagers still has strategic growth drivers, but they help support the view that the stock is trading at or about fair value. The analysts tell clients in a note that easing supply constraints mean that sales growth is likely to catch up, following a slow start to 2023. Wilsons cuts its target price on the stock by 1% to A$12.99. Shares are down 3.6% at A$12.39. (stuart.condie@wsj.com; @StuartLCondie)

0255 GMT - Technology One's migration to a SaaS provider is close to complete and its market outperformance is likely played out, Shaw & Partners analysts suggest. They downgrade the stock to hold from buy, saying that the switch looks set to be complete in FY 2024 and that headline revenue growth may be about to slow. They see SaaS annual recurring revenue growth slowing to 18% in FY 2024 from 40% in FY 2023, with top-line revenue growth of 9%, from 13% previously. They also observe in a note that Technology One is trading above its historical earnings multiple range. Shaw & Partners raises its target price by 15% to A$15.70. Shares are 1.7% higher at A$16.17. (stuart.condie@wsj.com; @StuartLCondie)

0104 GMT - Commonwealth Bank of Australia is continuing to sharpen its small to medium-size enterprise offering, and could be better placed than rivals to capitalize on innovation over the medium term, say Macquarie analysts in a note. The lender this week outlined further developments in digital strategy, underpinned by increasing use of AI. Macquarie notes that CBA continues to invest in improving front-end UX and services, and an AI-based chatbot for call-center staff, while its new Capital Growth Account is designed to target an underserved small-business segment. "CBA appears to be moving in the right direction, by incrementally strengthening its customer proposition, but sustainability of benefits and financial implications remain unclear," Macquarie says. (alice.uribe@wsj.com)

0046 GMT - Australian private health insurers Medibank and Nib are preferred over hospitals like Ramsay Health Care in the current environment, say Morgan Stanley analysts in a note. It attributes this view to the fact that private health insurance's deferred premium increase is seeing membership retention and structurally lower claims expense. At the same time, MS says regulator data shows that hospital activity in the March quarter has picked up, while non-surgical activity remains soft. (alice.uribe@wsj.com)

0024 GMT - Universal Store's latest update shows trading conditions deteriorating much faster than Wilsons analysts had previously anticipated. Earnings guidance is about 20% lower than the Wilsons analysts had forecast, which they say is largely driven by slower sales. Slimmer-than-expected profit margins are due to increased promotional activity and smaller consumer basket sizes, they add. Yet all issues appear macro driven and the analysts maintain an overweight rating on the stock, citing a strong pipeline of store openings and management's track record. Wilsons lowers the target price by 40% to A$4.20. Shares are down 2.9% at A$3.06. (stuart.condie@wsj.com; @StuartLCondie)

0018 GMT - Universal Store remains a buy for Goldman Sachs despite the Australian fashion retailer's trading update revealing a weaker sales environment. GS analysts tell clients in a note that the soft 2H FY 2023 update shows consumers increasingly cautious toward discretionary spending. Yet Universal's track record of product execution, an under-penetrated store network, and the potential for improved margins help mitigate their worries over the external headwinds slowing earnings momentum. They cut target price on the stock by 32% to A$5.05. Shares are 4.4% lower at A$3.01. (stuart.condie@wsj.com; @StuartLCondie)

0013 GMT - The balance of regulatory risks for Australian private health insurers looks to be more favorable into the future, say UBS analysts Scott Russell and Shreyas Patel in a note. They reckon that the most topical issue currently is prostheses reform, which is well under way. "Successful prostheses reform will likely provide both margin benefits and further premium savings for policyholders commencing in FY 2023," says UBS. The investment bank is positive on Australia's PHI sector, and thinks it provides both defensive characteristics and interest-rate leverage in the current environment. UBS adds that it thinks earnings are reasonably predictable, relative to other insurance segments, and earnings risks are skewed to the upside. (alice.uribe@wsj.com)

0001 GMT - Eagers Automotive's trading update was more negative than positive, Jefferies analyst John Campbell says in a note. Eagers cited ongoing port supply issues, a 15% on-year decline in the New Zealand market due to bad weather, and cost inflation. On the flip side, the car dealership said its order book has grown, gross margins have strengthened, and it's had some success stripping out costs. Jefferies had beenexpecting 1H supply to improve compared with a year ago, but the update from Eagers "suggests supply remains more of a constraint in 1H than we thought suggesting weaker 1H but higher revenue and margins than we previously thought for 2H." (david.winning@wsj.com; @dwinningWSJ)

2350 GMT - Jefferies is no longer as bearish about Qube's container volumes. In a note, analyst Anthony Moulder highlights that April volumes are down 4.9% across all four ports, and emphasises that the weakness seen in February's growth hasn't been repeated in March-April. "With 2H volumes down by 6.6%, they are currently trending better than previously forecast (down 11.3% for 2H), resulting in an upgrade to expectations," says Jefferies, which rates the stock a buy. The bank now expects container volumes to fall 7.0% in 2H, also improving earnings from Qube's logistics segment. (david.winning@wsj.com; @dwinningWSJ)

2346 GMT - Positive sentiment toward Australian private health insurers is likely to persist post-Covid and potentially drive higher participation, say UBS analysts Scott Russell and Shreyas Patel in a note. A survey by the investment bank last year indicates that consumers are seeing greater value for money in PHI. "The survey data also pointed to higher average tiering, reduced downgrading, and less sticker shock on price increases," says UBS. It notes that Australian PHI participation bottomed during the pandemic in 2020 and has been rising since that time, with UBS expecting this rising participation trend to persist, driving higher policyholder numbers and premium revenues. (alice.uribe@wsj.com)

(MORE TO FOLLOW) Dow Jones Newswires

2345 GMT - Online travel agency Webjet's upbeat FY result hasn't shaken Jefferies from an underperform call on its stock. In a note, analyst John Campbell acknowledges Webjet is in a purple patch driven by a sharp recovery in its Leisure business and gives credit to management's ability to deliver two strong earnings beats in a row. "We think Leisure will fully normalize in the next 12 months, meaning Webjet starts cycling tougher comps from 2H," Jefferies says. "At that point, weaker macro may start interceding." The bank raises its FY 2024-FY 2025 EPS forecasts by 5%-6%, and lifts its price target by 19% to A$6.70/share. Webjet ended Wednesday at A$7.58. (david.winning@wsj.com; @dwinningWSJ)

2333 GMT - Medibank's policy numbers didn't recover in the March quarter, which implies further market share loss in the wake of its cyber security incident, say UBS analysts Scott Russell and Shreyas Patel in a note analyzing new regulator data on Australia's private health insurance sector. At the same time, UBS reckons the data from the Australian Prudential Regulation Authority implies that Nib continues to increase market share. Across the sector, UBS thinks APRA's March quarter data release shows a broad lift in participation, led by younger cohorts, while premium growth also accelerated.(alice.uribe@wsj.com)

2327 GMT - Webjet's trading update leaves Morgan Stanley analysts with questions over the Australian travel agent's likely FY24 total transaction value. The analysts point out that the 40% on-year growth called out for the first seven weeks of the fiscal year implies negative growth on 4Q FY22 if extrapolated across the whole of 1Q FY23. Yet management also did not rule out sustaining such a level of on-year growth across further quarters that feature much tougher comparable periods. The analysts say in a note that they anticipate Webjet making further gains in the B2B market. MS raises target price 15%, to A$7.45, and stays equal-weight on the stock, which last traded at A$7.58. (stuart.condie@wsj.com; @StuartLCondie)

2324 GMT - New regulator data look to show a rebound for Australian private health insurers in the March quarter, after a softer December quarter, say UBS analysts Scott Russell and Shreyas Patel in a note. In an analysis of the data, UBS says March was a buoyant quarter for both volumes and margins, adding that while policy growth slowed to +0.5% quarter on quarter, premium growth accelerated to +6% versus the previous corresponding period. At the same time, UBS says net margin has continued to rise in each of the past three quarters, with all the above looking to indicate a positive lead for PHI's results. UBS keeps its buy call on Medibank and Nib. (alice.uribe@wsj.com)

0548 GMT - Central banks around the world are likely to "keep on leaning into" recession until they get rid of it, says AustralianSuper CIO Mark Delaney. He tells the Morningstar Investment Conference in Sydney that "central banks can't afford to let inflation out of the bag." In Delaney's estimation, inflation could be a medium-term issue. "I think the shorter term looks better than people anticipate, but the medium terms could be a bit worse," he says. Inflation has the potential to come down, but then structural factors like tight labor markets and the energy transition, could push it back up again. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

May 25, 2023 01:19 ET (05:19 GMT)