0449 GMT - Westpac's 3Q trading update looked a bit soft, UBS analyst John Storey says in a note. Even so, he says that the Australian lender's run rating seems to be relatively in line with Visible Alpha consensus for the full year. Regarding operating trends, UBS reckons these are in line with what it has witnessed from other lenders, but it calls out Westpac's core net interest margin, which was down 4 bps versus 1H, slightly worse than peers. Revenue trends seem somewhat stronger than expected, UBS says, adding that Westpac's 3Q unaudited reported net profit of A$1.8 billion suggests it will need to deliver another quarter of earnings similar to 3Q to deliver full-year consensus forecasts. UBS is neutral on the stock. (alice.uribe@wsj.com)

0425 GMT - While in some financial aspects the pandemic may be over, Nib CEO Mark Fitzgibbon says there remains a hangover. Speaking to analysts after the Australian health insurer issued its FY 2023 results, he said: "Covid from a purely accounting commercial point of view is over. In terms of the consequences of Covid, not so over, because …we will move back towards whatever the new normal happens to be." For example, Fitzgibbon expects there'll be some treatment delivery efficiency, there remains increased pressure among providers, particularly hospitals, who suffered badly through the pandemic. "There's quite a few moving parts," says Fitzgibbon, noting that Nib remains comfortable with its commitment around not "profiteering" from Covid-19-related benefits. (alice.uribe@wsj.com)

0411 GMT - Australian health insurers may need to price their products to cover the rising costs of medical inflation, says Nib CEO Mark Fitzgibbon. Speaking to analysts after the company issued its FY 2023 results, he says he thinks the government will accept any "rational" pricing application made by the sector, after a period of very low price increases. "That was appropriate…it reflected a lower claims environment, particularly reflecting the lower level of risk equalization we incurred during Covid," says Fitzgibbon. "We know the hospitals, are in particular under pressure,...will be looking for greater compensation, so I'd be surprised, without wanting to preempt any application that we or other operators may make, but we will need to price in that level of inflation." (alice.uribe@wsj.com)

0402 GMT - Credit provider Latitude Group is showing green shoots of recovery, but there is better value elsewhere among Australian financial stocks, Macquarie analysts say. They tell clients that they see the prospect of rising volumes as origination momentum picks up, with the benefits of repricing driving improved margins. Yet they reckon that performance will likely lag behind long-term averages given elevated funding costs and subdued near-term consumer spending. Worries about potential regulatory and legal action over Latitude's cyber breach continue to weigh on the stock, they add. Macquarie lifts the target price by 11% to A$1.00 and maintains an underperform rating on the stock, which is up 1.7% at A$1.185. (stuart.condie@wsj.com)

0358 GMT - Domain shares have had a good run but now look expensive given the level of investment from the property advertiser, Macquarie analysts say. They downgrade the stock to underperform from neutral, lowering their earnings forecasts for FY 2024, FY 2025 and FY 2026 by 28%, 21% and 20%, respectively, to reflect higher cost guidance. They also tell clients in a note that they are lowering their valuation multiple to 16 times earnings from 18.5 to reflect dwelling-price forecasts. Macquarie cuts the target price by 30% to A$2.80. Shares are up 3.3% at A$3.73. (stuart.condie@wsj.com)

0313 GMT - Telstra's FY 2023 results support Morgan Stanley analysts' view that average revenues per user are being repaired across the Australian mobile industry. The MS analysts point out that Telstra's mobile earnings rose by 15% in the 12 months through June, a better lift than anticipated. They disagree with those who think the improvement is temporary and likely to stall amid renewed competition. Telstra, TPG Telecom and Singtel-owned Optus have all demonstrated a focus on improving margins, they add. MS has an overweight rating and A$4.75 target price on Telstra shares, which are down 0.1% at A$3.995. (stuart.condie@wsj.com)

0300 GMT - AGL Energy's transition agreement with the Victoria state government provides additional certainty for future cash flows for its Loy Yang A coal power station, RBC Capital Markets analyst Gordon Ramsay says. This improved cash-flow certainty will support AGL's funding position and its targeted credit rating, Ramsay says in a note. He tells clients this is positive as the power generator and retailer targets A$8 billion-A$10 billion in spending through 2035 to transform its generation portfolio. RBC has a last-published sector-perform rating and A$9.75 target price on the stock, which is up 0.2% at A$10.965. (stuart.condie@wsj.com)

0200 GMT - Westpac's 3Q update looks mixed, Citi analysts say in a note, pointing to an underlying net interest margin that was largely in line with expectations and a solid quarter from a funding perspective while also reckoning that the market will likely focus on the outlook for underlying costs, which looks well ahead of market expectations and will raise questions on the lender's cost strategy. Citi notes that Westpac's 3Q net profit of A$1.8 billion was slightly softer than the A$1.9 billion the investment bank was forecasting on but in line with consensus. Westpac falls 2.1% to A$20.82. (alice.uribe@wsj.com)

0128 GMT - IAG's FY 2023 earnings and dividend were both below consensus, with insurance profit missing by around 3%, UBS analysts Scott Russell and Shreyas Patel say in a note. Margins in its direct business and New Zealand units were below UBS's expectations, while its intermediate division was ahead. UBS reckons part of FY 2024 guidance looks disappointing, with guidance for reported insurance margin of 13.5%-15.5% below UBS's anticipated guidance range. "Stock is expensive in our view and so may not be enough here in the short term to appease bulls," UBS says. IAG is 3.6% lower at A$5.63. (alice.uribe@wsj.com)

0117 GMT - The a2 Milk company's fiscal 2024 outlook is weaker than expected by the market and could deteriorate further, Citi analysts warn. They tell clients in a note that the dairy-product supplier's guidance implies that the average analyst Ebitda forecast is too high. They acknowledge that the dual Australia- and New Zealand-listed company has executed impressively on strategy, but point to slowing momentum over fiscal 2023. They warn that broader market headwinds could hit earnings further in the year ahead. Citi has a last-published neutral rating and A$5.30 target price on the stock, which is down 12% at A$4.35. (stuart.condie@wsj.com)

0043 GMT - NIB's FY 2023 is a high quality earnings beat with underlying operating profit coming in 4% ahead of consensus, UBS analysts Scott Russell and Shreyas Patel say in a note. The investment bank reckons that all divisions appear to have contributed to the result. At the same time, UBS says volumes and margins are overall buoyant compared with the investment bank's estimates, while claims costs are still below pre-Covid. Still, UBS sees that guidance appears cautious, noting that the stock has pulled back lately, but this result should likely provide a boost. The stock is up 5.5% at A$8.44. (alice.uribe@wsj.com)

0024 GMT - Charter Hall is usually conservative with its earnings guidance but Citi suggests a key difference this time compared with previous reporting periods. Charter Hall has signaled FY 2024 operating EPS of approximately 75 Australian cents. That fell short of Citi's forecast of 76.1 cents and consensus hopes for 77.9 cents. "While Charter Hall is typically conservative on initial guide, we believe the change in language around guidance to use 'approximately' versus 'no less than' could indicate lesser upside than usual reporting periods," analyst Suraj Nebhani says in a note. (david.winning@wsj.com; @dwinningWSJ)

0018 GMT - Cost pressures are now evident in Sonic Healthcare's pathology business as the tailwind from providing PCR tests for Covid-19 ebbs, Morgan Stanley says. Sonic's 2H Ebitda margin was 19%, which fell short of Morgan Stanley's 24% estimate and consensus hopes for 22%. That led to Sonic's 2H EPS missing Morgan Stanley's forecast by 14%. Analyst Sean Laaman cuts his FY 2024 EPS estimate by 7% to incorporate lowered margin expectations. "Given guidance and the lower margin, in our view, expectations are now more reliable, and risk may be skewed to the upside," Morgan Stanley says in a note. That partly reflects Sonic's balance sheet optionality and diminishing costs of infrastructure associated with Covid-19 PCR testing. (david.winning@wsj.com; @dwinningWSJ)

0013 GMT - The price fetched by Dexus for the office tower at 1 Margaret Street, Sydney, is an upbeat signal for investors, Citi says. Dexus on Friday said it has exchanged contracts on the sale and will realize A$293.1 million in proceeds, which is in line with the property's book value. "In our view this is a positive update given the discount to net tangible assets," analyst Howard Penny says in a note. "Transaction volumes in Sydney office have been slow and therefore this is a positive datapoint for cap rate evidence." Citi retains a neutral call on Dexus. (david.winning@wsj.com; @dwinningWSJ)

(MORE TO FOLLOW) Dow Jones Newswires

0007 GMT - There are unlikely to be material changes to consensus on the back of Westpac's fiscal 3Qupdate, E&P analyst Azib Khan says in a note. Even so, E&P says modest deterioration in credit quality is evident. Khan notes that while the CET1 ratios of ANZ and NAB received further residual benefits from the revised capital framework in the June quarter, Westpac's CET1 ratio doesn't appear to have benefitted further to the same extent. "The CET1 ratio of 11.86% at June is around 10 basis points softer than we expected," E&P says, noting that the 3Q update is scant on detail, as expected.(alice.uribe@wsj.com)

0006 GMT - Domain Holdings Australia may need to step up investment in product development and marketing, Citi analyst Siraj Ahmed says. He points out in a note to clients that larger real-estate advertising rival REA's FY 2024 cost growth is currently expected to exceed than that at Domain. Even leaving that aside, Ahmed says that Domain may need to invest in a new home-loans offering following its decision to exit its current loss-making joint venture. Citi cuts its target price 16% to A$3.70 and stays neutral on the stock, which is down 1.1% at A$3.57. REA is 61% owned by News Corp., which owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal. (stuart.condie@wsj.com)

0000 GMT - Ampol's operating result should be enough to support its recent share-price outperformance, Jefferies says, although consensus estimates for the refiner's interest cost look too optimistic. In a note, analyst Michael Simotas highlights that Ampol's net interest totaled A$136 million in 1H. That's significant because consensus estimates are for A$224 million in 2023 whereas Simotas thinks A$261 million is more likely. "Expect stock to trade flat," Simotas says ahead of the ASX opening. (david.winning@wsj.com; @dwinningWSJ)

2353 GMT - IAG's FY 2023 earnings disappointed in some areas, with the insurer's dividend also lower than consensus, Citi analysts say in a note. IAG's cash earnings of A$452 million were below Citi's estimate of A$548 million, partly due to lower than expected earn through of gross written premium. Still, Citi reckons the outlook remains for strong top line growth and the mid-point of the FY 2024 reported margin guidance isn't too different to current consensus forecasts. "We are conscious of how well the stock has performed since Investor Day and therefore believe it is possible we might see a pause or slight pullback in the share price today," says Citi. The stock was last down 0.7% at A$5.84. (alice.uribe@wsj.com)

2339 GMT - Magellan's FY 2023 NPAT was in line with consensus expectations, but delivered an around 2% beat in its funds management division on lower costs, say Macquarie analysts in a note. Even so, they note this was offset by lower other revenue, primarily from an around A$11 million realized loss on seed investments. Magellan declaring a 30 Australian cents per share dividend was a positive surprise, says Macquarie which it reckons may explain the lack of recent buy-back activity. FY 2024 expense guidance of A$95 million-A$100 million was a main highlight, says the investment bank, which raises its target price 24% to A$9.00. Magellan was last 13% higher at A$10.42. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

August 21, 2023 00:55 ET (04:55 GMT)