0455 GMT - Johns Lyng Group is in a better position to deliver earnings upside from cross-selling than when it exited essential home services in 2018, Citi analysts say in a note. They tell clients that the Australian building-services provider's acquisitions in the fire, electrical and gas-compliance testing space introduce offerings that are complementary to its existing portfolio of businesses. They anticipate meaningful revenue synergies from cross-selling, which would drive higher EPS accretion than the 5% flagged by Johns Lyng. Citi maintains a buy rating and A$6.50 target price on the stock, which is down 1.8% at A$5.33. (stuart.condie@wsj.com; @StuartLCondie)
0443 GMT - Australian gold miner Silver Lake's 4Q cash and bullion growth comfortably exceeded Macquarie analysts' expectations. Resuming coverage of the stock with an outperform rating, Macquarie's analysts tell clients in a note that Silver Lake's FY 2023-end cash and bullion of A$331 million was up A$63 million from the end of 3Q. They had only expected an increase of A$35.5 million. This quality cash-flow generation is set to continue through FY 2024 at the same quarterly run-rate, they say. Looking further ahead, they reckon Silver Lake should generate free cash of A$235 million in FY 2025. Macquarie has a A$1.70 target price on the stock, which is down 2.05% at A$1.0725. (stuart.condie@wsj.com; @StuartLCondie)
0113 GMT - UBS cuts its EPS expectations for Woodside Energy on lower commodity-price forecasts. UBS analyst Tom Allen cites improved supply and concerns over demand as the investment bank lowers its forecasts for oil and liquefied natural gas prices. Woodside's progress on major projects and associated capital expenditure are also in focus for investors, he says. UBS lowers its EPS forecasts for the three fiscal years through FY 2025 by between 7% and 13%. It cuts the stock's target price 3.1% to A$34.80 and maintains a neutral call. Shares are down 2.2% at A$33.73. (stuart.condie@wsj.com; @StuartLCondie)
0106 GMT - Siteminder's FY 2023 results will likely be a non-event for investors, who will be focused on the accommodation-software provider's FY 2024 outlook, Wilsons analysts say. Siteminder's peers point to normalizing travel trends after the decline during the pandemic and subsequent surge, they tell clients in a note. Peers also mention pockets of weakness in forward bookings across the travel industry, they say. Yet they maintain an overweight rating, citing price rises as a supporting factor. Wilsons rolls forward its valuation to FY 2024 and lowers its sales multiple to 5X from 6X to reflect increased conservatism. They lower the target price by 1.3% to A$4.47. The stock is 2.0% lower at A$3.00. (stuart.condie@wsj.com; @StuartLCondie)
0050 GMT - Regal Partners' 2Q funds under management are likely to be weak, with its main funds experiencing negative returns, Bell Potter analyst Marcus Barnard says in a note. "We originally set our forecasts with a high return and net inflow assumptions, and the returns we expect in 1H mean we adjust down our forecasts for FUM, management fees, performance fees, returns on shareholder funds and staff costs," says Bell Potter. It cuts the stock's target price 7% to A$3.45. Still, the investment bank continues to favor Regal, as it expects future fund performance and inflows to be strong, saying that one quarter of weak returns doesn't change its view. Regal is down 0.4% at A$2.57. (alice.uribe@wsj.com)
0040 GMT - Citi analysts lower their user-growth forecasts for Altium to reflect the soft macro conditions already showing up in the software provider's digital sales. The analysts say in a note that web visits to the printed-circuitboard specialist's digital-sales page have weakened over recent months and in June were down 49% on year. Digital is only a small contributor to overall sales but the weakness does speak to challenging trading conditions, they say. Citi continues to expect strong yield growth on price increases but nonetheless lowers the stock's target price 1.1% to A$39.30. The investment bank stays neutral on the stock, which is down 2.4% at A$35.47. (stuart.condie@wsj.com; @StuartLCondie)
0037 GMT - Higher interest rates and falling affordability may impact demand for new residential homes in the near term, but the tougher rental market and strong population growth could lead to a bounce back in demand in 2024, Citi analysts say in a note. The investment bank reckons that affordable residential options--land lease and houses/apartments--could win out against the backdrop of higher cost of debt and lower borrowing capacity. Citi retains its buy call on Stockland, Ingenia Communities, and Lifestyle Communities. It prefers Stockland over neutral-rated Mirvac on Stockland's essentials-based retail, logistics, and land lease over Mirvac's office spaces.(alice.uribe@wsj.com)
0030 GMT - Online lottery-ticket seller Jumbo Interactive's price rises lay the platform for an attractive set-up heading into FY 2024, Morgan Stanley analysts say. They tell clients in a note that Jumbo's price rises will increase its FY 2024 take rate to about 22.2% prior to service fees. They also point out that FY 2024 will benefit from comparison with FY 2023, which will likely turn out to be a soft year due to slightly lower sales. MS also anticipates further consolidation among electronic lottery managers in the U.K. and Canada. MS maintains an overweight rating and A$20.80 target price on the stock, which is down 1.0% at A$13.49. (stuart.condie@wsj.com; @StuartLCondie)
0016 GMT - Lottery Corp. has scope to post growth in FY 2024 on an assumed improvement in jackpot sequencing and margin expansion, Morgan Stanley analysts say in a note. The investment bank's FY 2024 estimates account partly for an assumed improvement in jackpot sequencing after a weaker 2H FY 2023, the margin benefit of higher retail commissions and upcoming pricing increases. "Due to a combination of these factors our FY 2024 earnings before interest, taxes, depreciation, and amortization sits +5% ahead of consensus estimates," says MS. Still, the investment bank says that while improved jackpot sequencing has de-risked upcoming FY 2023 results, the company's valuation looks fair, and it downgrades the stock to equal weight from overweight. (alice.uribe@wsj.com)
0512 GMT - QBE is trading at a 16% premium to weighted international peers versus a three-year average discount of around 2.1%, Macquarie analysts say in a note. But the Australian investment bank reckons this is more reflective of peers being affected by global economic challenges. Ahead of the general insurer's FY 2023 results, Macquarie estimates gross written premium growth of 10.6% in constant currency, compared with guidance of about 10%, prior to a 120bp forex headwind. Macquarie keeps its outperform call on QBE and raises the target price by 5.6% to A$16.90/share. QBE is trading at A$15.84/share. (alice.uribe@wsj.com)
0509 GMT - Vehicle accessory manufacturer ARB Corp.'s total addressable market in the U.S. is smaller than some observers think, Macquarie analysts say in a note to clients. They estimate that just 7% of the key 4x4 vehicle models in the U.S. are fitted with combined bull/nudge bars, compared with 45% in Australia. They don't expect U.S. fitment rates to trend towards those in Australia due to market differences and consumer trends. The U.S. market is skewed to different products and has a fragmented distribution network, and they reckon that competition leaves ARB positioned as an enthusiast-focused brand. Rising consumer headwinds are also a concern, they add. Macquarie trims ARB's target price by 20% to A$25.70 and downgrades the stock to underperform from neutral. The stock is 4.6% lower at A$28.72. (stuart.condie@wsj.com; @StuartLCondie)
(END) Dow Jones Newswires