0030 GMT - Intellectual property company IPH's 30% share-price drop since its FY 2023 results in August surprises Morgan Stanley, which is bullish about the stock. That is because IPH's annual results slightly beat expectations, while the company continues to benefit from M&A via another deal in Canada, and growth in its Australia and New Zealand businesses is improving, analyst Joseph Michael says in a note. Also, AUD/USD has weakened 5% in 1H so far and every 1 Australian cent decline equates to a 1.5% increase in EPS for IPH, Morgan Stanley says. "Market sentiment has softened recently, which should be positive for defensive names like IPH," Morgan Stanley says. "Bottom line: We think risk/reward is attractive." (david.winning@wsj.com; @dwinningWSJ)
0010 GMT - Pro Medicus should have no problems reaching market expectations for fiscal 2024 revenue of A$156 million, Bell Potter analyst John Hester writes in a note. While further contract announcements during the fiscal year are unlikely to affect earnings until later, he forecasts A$159.9 million in revenue for the 12 months through June 30, 2024. That would represent a 28% on-year increase. Hester says he can see no reasons why the stock should underperform over the next 12 months. Bell Potter lifts target price 7.1% to A$75.00 and maintains a hold rating on the stock, which is down 0.5% at A$79.64. (stuart.condie@wsj.com)
2358 GMT - Pro Medicus's latest contract is a one-off and doesn't alter Morgans analysts' assumptions surrounding the Australian medical imaging specialist's long-term new contract growth. They tell clients in a note that the A$140 million contract with Baylor Scott and White Health falls outside their rolling average assumptions, but still see it as a positive since it highlights what they call potential monster contracts available within the U.S. healthcare system. Pro Medicus's high margins and long-contracted revenue base still make it one of the highest quality businesses on the ASX, the Morgans analysts say. They raise its target price 12% to A$74.00 and keep its hold rating. Shares are at A$80.01 ahead of the open. (stuart.condie@wsj.com)
2337 GMT - Premier Investments is unlikely to use its annual results announcement to update investors on whether it plans to divest any of its brands, UBS analyst Shaun Cousins says. He writes in a note that it is too early in the strategic review process for the Australian retail conglomerate to share any thoughts with the market. Investors will be interested in the size of earnings across Premier's apparel brands, whether there are any hurdles to expansion for its Smiggle and Peter Alexander businesses, and how Premier would manage any dis-synergies, he says. UBS has a sell rating and a A$23.00 target price on the stock, which is at A$24.87 ahead of the open. (stuart.condie@wsj.com)
2321 GMT - Star Entertainment's stabilizing trading conditions, rapid cost reductions, recapitalization and resolution of concerns over casino duties should improve investor confidence, UBS analyst Andre Fromyhr says. He writes in a note that the broader market may want clarity on other issues before becoming truly positive, but nonetheless maintains a buy rating on the stock. Fromyhr reels off a list that includes likely regulatory fines and the opening of its latest Brisbane site. He cuts target price 28% to A$0.95, primarily on dilution from Star's latest capital raise. Shares are at about A$0.69 ahead of the open. (stuart.condie@wsj.com)
2319 GMT - While Bank of Queensland's transformation program looks like the right long-term strategy to deliver a stronger and simpler bank, Goldman Sachs analysts Andrew Lyons and John Li reckon it does leave the bank more exposed to inflation in non-staff costs. "While management appears to be responding to these issues and will announce details of a productivity initiative at its FY 2023 result, we are concerned by the operational risks and cost pressures involved in undertaking such an initiative," they say in a note. GS also reckons BOQ's volume momentum remains weak. The investment bank downgrades the stock to sell from neutral and cuts its target price 8%, to A$5.60. BOQ last closed flat at A$5.77. (alice.uribe@wsj.com)
2315 GMT - The change in majority control of Coronado Global Resources will disappoint investors hoping for the coal miner's stock to become more liquid. Sev.en Global Investments, a Czech investment group owned by Pavel Tykac, this week agreed to buy a 51% interest in Coronado. In a note, UBS analyst Lachlan Shaw said a relatively tight effective free float remains a challenge for Coronado to appeal to equity investors. "Growth/M&A had presented an avenue to address this," UBS says. "We are unconvinced Sev.en would support diluting its share in any potential M&A transaction after just acquiring." (david.winning@wsj.com; @dwinningWSJ)
2314 GMT - The size of Pro Medicus's latest US contract is a handy reminder to investors of the scale of the opportunity open to the Australia-listed wound-treatment specialist, Goldman Sachs analysts say in a note. They tell clients that the minimum annualized value of the 10-year contract with Baylor Scott and White Health is about 5.4 times larger than Pro Medicus's historical average contract. It also demonstrates the company's compelling product and value proposition across a broad range of customers, they add. GS raises target price 10%, to A$88.00, and maintains a buy rating on the stock, which is at A$80.01 ahead of the open. (stuart.condie@wsj.com)
2254 GMT - Challenger's push for diversified sales growth, and extending the tenor of its life books is likely to result in meaningful book growth into FY 2024, say Goldman Sachs analysts Julian Braganza and Brian Kim in a note. At the same time, they see the Australian financial company should see further cost of equity margin expansion, bringing forward the potential for strong earnings growth, which would help underpin Challenger's FY 2024 guidance. GS says it is positive on Challenger as it expects book growth to be strong through FY 2024, and COE margins should continue to improve into FY 2024. GS upgrades the stock to buy from neutral and raises its target price 6% to A$6.89. Challenger was last up 0.3% to A$6.44. (alice.uribe@wsj.com)
(END) Dow Jones Newswires