0437 GMT - Temple & Webster's strategy of investing amid cyclical retail weakness makes strategic sense to Morgan Stanley analysts, who think the move strengthens their long-term positive thesis. They reckon that the online furniture retailer is making the right move in sacrificing near-term margins for sales growth while its rivals are challenged by macroeconomic conditions. Lower pricing has helped attract value-conscious customers while marketing spending should help accelerate revenue growth into 2H FY 2024, they say in a note. Scale benefits, share gains and margin upside all figure in MS's long-term positive thesis. MS lifts its target price 25% to A$7.00 and maintains an overweight rating. Shares are up 5.7% at A$5.46. (stuart.condie@wsj.com)
0404 GMT - Computershare's earnings quality is improving just as growth is slowing, Morgan Stanley analysts say. They point out that while Computershare's FY 2024 EPS guidance fell short of market expectations by 5%, the share-registry provider anticipates Ebit rising 10% once its rate-sensitive margin-income is stripped out. On top of this, the MS analysts say in a note that EPS will benefit by 5% on a full-year basis from Computershare's A$750 million buyback. Computershare has likely been conservative with its guidance to guard against the impact of lower interest rates, they add. MS raises its target price 2.9% to A$24.50 and stays equal-weight on the stock, which is up 2.1% at A$24.615. (stuart.condie@wsj.com)
0330 GMT - Telstra's decision to shelve plans to divest all or part of its fixed-infrastructure business is credit positive for the Australian telecommunications provider, according to ratings agency Moody's. Ian Chitterer, vice president at Moody's Investors Service, says Telstra's decision to keep hold of the assets over at least the medium term removes an area of uncertainty for creditors. Chitterer also says in a note that Telstra's fiscal 2023 results were broadly in line with Moody's expectations. (stuart.condie@wsj.com)
0252 GMT - UBS analyst Lucy Huang wonders whether Seven West Media has scope for further cost reductions in the event that macroeconomic pressures persist through the Australian media conglomerate's fiscal 2024. She says in a note that Seven West's exposure to TV ad markets means that broader economic conditions remain the swing factor in its performance. Huang reckons that underlying cost inflation of 2% suggests that cost growth in Seven's TV businesses is sticky so far. UBS cuts the target price 7.3% to A$0.38 and stays neutral on the stock, which is down 4.0% at A$0.36. (stuart.condie@wsj.com)
0247 GMT - Seek loses a bull at UBS, where analyst Lucy Huang sees limited catalysts for a share-price rerate over the next 12 months. Huang tells clients in a note that she remains positive on the chances of the employment marketplace lifting yield at an average annual rate in the high single digits over the medium term. However, she warns of the impact of underlying cost growth. Huang lowers Ebitda forecasts for the three years through FY 2026 by an average of 8% to reflect higher levels of reinvestment. The target price falls 4.7% to A$26.50 and UBS cuts its recommendation to neutral from buy. Shares are down 0.8% at A$23.34. (stuart.condie@wsj.com)
0135 GMT - ANZ's 3Q FY 2023 disclosures show another relatively benign asset quality print, says Citi analysts in a note. Citi sees that ANZ's capital looks slightly soft, "ultimately the underlying drivers are opaque and it is not possible to make any inferences on earnings." Still, it's unlikely there was any material miss on earnings in 3Q, given asset quality was a beat and deposit trends look broadly favorable, Citi reckons, adding that it's difficult to be definitive on the limited ANZ disclosures.(alice.uribe@wsj.com)
0100 GMT - Amcor's guidance for FY 2024 adjusted EPS of 67-71 U.S. cents missed consensus hopes, which CEO Ron Delia attributes to the packaging company's likely interest expense. Amcor expects interest expense to rise in FY 2024, albeit mostly in its fiscal first half. Amcor says 70% of its debt is tied to fixed rates, but the remainder is exposed to swings in interest rates. As a result, its interest expense has risen in the wake of global central banks tightening monetary policy sharply over the past 15 months. In a note following Amcor's FY 2023 result today, Jefferies highlighted that consensus expectations for FY 2024 adjusted EPS were 73 cents. So, Amcor's guided range represents a 6% miss at the midpoint. (david.winning@wsj.com; @dwinningWSJ)
0058 GMT - Computershare's A$750 million share buyback should be 2.4% EPS accretive on a full-year run-rate, Jefferies analysts reckon. They tell clients in a note that their calculation is based on an assumption of an average A$24-a-share purchase price and their forecasts for the Australian share-registry provider. Yet they lower their EPS forecasts for FY 2024 and FY 2025 by 6% and 9%, respectively, on lower margin-income assumptions and Ebit margin trends. Jefferies trims its target price by 0.7% to A$24.02 and keeps a hold rating on the stock, which is up 2.6% at A$24.73. (stuart.condie@wsj.com)
0051 GMT - Temple & Webster should deliver on its aim to gain market share in Australian furniture retail but economic conditions remain a concern, Macquarie analysts say in a note. They tell clients that they have lifted their fiscal 2024 revenue growth forecast for the online retailer to 16% from 12.5% to reflect improved trading since the start of the period. They increase their revenue growth forecasts over the next five years to an average rate of 20%, up from 10% previously, to sit at the lower end of company guidance. Macro conditions keep them from becoming less positive on the stock. Macquarie lifts the stock's target price 68% to A$6.70 but maintains a neutral rating. Shares are up 4.9% at A$6.41. (stuart.condie@wsj.com)
0050 GMT - China's economy barely grew between March and June, but the CEO of packaging company Amcor says he is cautiously optimistic about the outlook there. Ron Delia highlighted a sequential improvement in Amcor's volumes in China in the three months through June, compared with the company's fiscal 3Q. Still, Delia says China--Amcor's largest emerging market--certainly hasn't staged a dramatic bounce back from the Covid-19 pandemic and that was disappointing. (david.winning@wsj.com; @dwinningWSJ)
0046 GMT - Computershare's A$750 million buyback provides protection against share-price downside at the same time as surplus cash reinvestment offers potential upside to medium-term earnings, Macquarie analysts say. They maintain an outperform rating on the stock despite the share-registry provider's final dividend missing market expectations. They tell clients in a note that Computershare could identify further opportunities for cost reduction as inflation normalizes over FY 2024. Macquarie keeps a A$26.00 target price on the stock, which is up 2.45% at A$24.69. (stuart.condie@wsj.com)
0041 GMT - ASX's FY 2023 results looks largely uneventful at first glance, with most of it well flagged at the company's June investor day, UBS analysts Scott Russell and Shreyas Patel say in a note. They note that earnings are 1% below both UBS and consensus, weighed down on both revenues and costs. For FY 2024, UBS reckons there is downside risk to dividends. "All up, not a lot here to change our sell rating." UBS says. The stock is down 1.7% to A$60.60.(alice.uribe@wsj.com)
0039 GMT - Computershare's largest ever share buyback, business portfolio adjustment and positive earnings outlook set it apart from other diversified financial stocks, Citi analyst Nigel Pittaway says. He maintains a buy rating on the stock despite earnings upside from the cycle of global interest-rate rises potentially being at an end. Pittaway tells clients in a note that the share-registry provider could maintain a cross-cycle level of US$600 million-US$700 million in annual margin income, but concedes that forecasting is difficult. Citi lifts its target price by 5.0% to A$27.20. Shares are up 2.2% at A$24.63. (stuart.condie@wsj.com)
0030 GMT - Domain's decision to exit its loss-making home-loan joint venture leaves Citi analysts wondering how quickly the Australian real-estate advertiser can introduce a new solution in the space. They tell clients that the removal of the business from Domain's results could offset underlying earnings downgrades to FY 2024 net profit projections, but nonetheless highlight uncertainty generated by the move. FY 2024 cost guidance is higher than they expected, although early volume momentum in Sydney and Melbourne is a positive, they add. Citi has a last-published neutral rating and A$4.40 target price on the stock, which is down 7.6% at A$3.77. (stuart.condie@wsj.com)
0026 GMT - ASX's FY 2023 underlying net profit after tax of A$491.1 million is 2% softer than Visible Alpha and Citi's expectations, the investment bank says in a note. As a result, and with not too much new in the outlook and guidance pre-announced, Citi reckons the stock will trade flat to down today. "ASX's focus seemingly remains on appeasing regulators and other stakeholders and modernizing its technology," Citi says, noting that on outlook, ASX looks to be hopeful of some growth in cash market volumes as inflation eases, and suggests there is a solid pipeline of corporates looking to list if conditions improve. ASX is down 1.9% at A$60.51.(alice.uribe@wsj.com)
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0017 GMT - Telstra's mobile business was the key highlight of the Australian telecommunications provider's fiscal 2023 result, UBS analyst Lucy Huang says in a note. She tells clients that Telstra's mobile earnings were about 9% stronger than she had anticipated, and about 7% higher than the average analyst forecast. Post-paid subscriber growth was weaker than she had anticipated but second-half average-revenue-per-user exceeded expectations, she adds in her note. Fiscal 2024 guidance is broadly in-line with market expectations, Huang adds. UBS has a last-published buy rating and A$4.75 target price on the stock, which is down 2.1% at A$4.16. (stuart.condie@wsj.com)
0006 GMT - NIB's sustained policyholder growth is being helped by lower premium rises and an increased focus on health during the pandemic, Morgan Stanley analysts say in a note, adding that the Australian health insurer is maintaining policyholder growth above the system. MS reckons NIB is likely to achieve its FY 2023 guidance of Australian Residents Health Insurance net policyholder growth of 4%-5%. NIB is also likely to see market share gains, with claims growth recovery taking longer than expected, MS says. For FY 2023, MS expects an underlying operating profit A$244 million versus a consensus of A$242 million, with an ARHI net margin of 8.5%.(alice.uribe@wsj.com)
2347 GMT - Netwealth not providing FY 2024 net flows guidance likely reflects uncertainty surrounding outflows and market sentiment, say Wilsons analysts in a note. With this in mind, Wilsons notes Netwealth management stress that FY 2023 was a particularly challenging year, and the Australian investment technology company is bullish on FY 2024. Wilsons notes funds under administration are already up A$2 billion in the first six weeks of FY 2024. "We expect 1H FY 2024 to be a strong half for Netwealth driven by the timing of recent inflows being late in 4Q FY 2023 and remuneration cost growth lagging as vacant roles are progressively filled," says Wilsons. It cuts its price target 1% to A$16.29/share, but maintains its overweight call. They last traded at A$14.51.(alice.uribe@wsj.com)
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