0400 GMT - Tyro Payments used its strategy day to highlight the underlying strength of its business but failed to provide investors with the short-term catalyst they were looking for, UBS analyst Tim Piper says. He writes in a note that some investors had been hoping for a change in the payments company's banking strategy or a move to outsource its payments switch. He says that either move could have delivered cost savings, with the return of Tyro's banking license also offering a way to release capital and focus strategy on payments. Piper reckons both options were always unlikely, and keeps a buy rating and A$1.80 target price on the stock. Shares are down 7.3% at A$1.01. (stuart.condie@wsj.com)

0354 GMT - The high cost of living should ensure that The Reject Shop continues to experience strong demand for low-cost consumables through the remainder of fiscal 2024, Ord Minnett analyst James Casey writes in a note. Casey keeps an accumulate rating on the Australian retailer despite sector challenges, noting its discount focus and shift to a period of driving same-store sales growth. The Reject Shop has already cut its cost base by lowering its store expense, labor and occupancy costs, he adds. Ord Minnett maintains a A$6.20 target price on the stock. Shares are down 3.5% at A$5.58. (stuart.condie@wsj.com)

0342 GMT - Tyro Payments' decision to hang on to its Australian banking license looks like a missed opportunity to Macquarie's analysts. They write in a note that returning the license would have allowed the payments company to release capital and reduce various costs. The analysts are skeptical of Tyro's target for banking gross profit to represent about 20% of group gross profit by FY 2027, and think 7% is more likely. More positively, they see little risk of Tyro lowering its FY 2024 guidance and think there is a chance that performance is tracking toward the top end year to date. Macquarie keeps an outperform rating and A$1.85 target price on the stock, which is down 7.3% at A$1.01. (stuart.condie@wsj.com)

0336 GMT - Citi analyst Siraj Ahmed turns bearish on Netwealth after what he calls another weak quarter from the Australian wealth manager. Netwealth's 1Q net flows of A$2.0 billion were 34% lower than the prior three months and well below Citi's expectation of A$2.5 billion. Ahmed writes in a note that, while the ASX-listed company's flows should benefit from the recent relaunch of its core menu and expanded investment menu, he sees risk from market volatility, high bond yields and exposure to discretionary wrap accounts. Citi lowers the target price by 6.9% to A$13.45 and cuts its recommendation to sell from neutral. Shares are down 8.05% at A$13.60. (stuart.condie@wsj.com)

0330 GMT - Nick Scali's 1H guidance is stronger than the market had anticipated and consistent with several key housing indicators, Citi analysts say in a note. The Australian furniture retailer's guidance for 1H profit of A$40 million-A$42 million compares with the average analyst forecast of A$38.6 million, the analysts write in a note. The 8.1% decline in orders in July slowed to 5.4% over 1Q, which the Citi analysts reckon equates to a 4.1% decline across August and September. The improving trading momentum helps support Nick Scali's status as a top Citi pick among small-cap retail stocks. Citi has a buy rating and a A$14.35 target price on the stock, which is down 0.6% at A$10.345. (stuart.condie@wsj.com)

0054 GMT - Whitehaven may have paid a fair premium for BHP and Mitsubishi's Blackwater and Daunia coal mines, but the deal structure including tranche payments looks good as it limits pressure on the coal miner's balance sheet and avoids an equity raise, Morgan Stanley analysts say in a note. Free cash flow estimated at around US$800 million between FY 2025-2027 from Daunia and Blackwater alone will mostly cover the US$1.1 billion tranche payments, say the analysts. They expect Whitehaven's gearing to peak at 32% in FY 2026 and drop to 20% by FY 2029, although at current coal prices that peak would be much earlier and lower, they say. The analysts raise their target on Whitehaven to A$8.90 from A$7.75 and keep an overweight rating. Whitehaven is down 1.4% at A$7.456 amid a broad pullback in stocks. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0033 GMT - The sale of BHP and Mitsubishi's jointly owned Blackwater and Daunia coal mines is a positive for BHP, say Morgan Stanley analysts, who say the alliance achieved a premium valuation for the assets. The up-to $4.1 billion sale was roughly 9% above the midpoint of MS's estimated valuation and will improve BHP's expected net debt position, the analysts say. They raise their target on the miner's Australian stock to A$44.20 from A$43.90 but keep an equal-weight rating "due to valuation and overhang from potential Samarco litigation." BHP is down 1.8% in Sydney at A$45.06/share amid a broad-based retreat in stocks. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0535 GMT - There are more signs that China could scrap tariffs on Australian wine in the coming weeks or months, which would be positive for Treasury Wine Estates, E&P Financial analyst Phillip Kimber says. Kimber points to Australian media reports that China's ambassador to Australia told journalists in Canberra that he is "optimistic" the issue can be resolved positively. In a note to clients, Kimber says that before the Covid-19 pandemic and the 2020 imposition of tariffs, Treasury's China operations delivered up to A$200 million in annual earnings. Recovering half its business would add about 12% to group earnings within three years, he reckons. (stuart.condie@wsj.com)

(END) Dow Jones Newswires

October 19, 2023 00:03 ET (04:03 GMT)