0359 GMT - ARB Corp.'s 10% growth in 1Q profit further confirms expectations among Wilsons analysts of gross margin improvements at the Australian auto parts maker. The analysts cut their FY 2024 revenue forecasts on ARB's confirmation of just 0.7% growth in 1Q sales, but the impact is largely wiped out by higher margin expectations. They think sales growth will accelerate sequentially through the remainder of FY 2024, and maintain an overweight rating on the stock. Wilsons lowers its target price by 1.6% to A$35.30. Shares are down 1.5% at A$30.06. (stuart.condie@wsj.com)

0306 GMT - Credit Corp. keeps its add rating from Morgans for now, although analyst Scott Murdoch warns that it remains to be seen whether the trajectory of U.S. debt collections stabilizes or deteriorates further. The Australia-based debt collector impaired the value of its U.S. book by 14% due to higher delinquencies and Murdoch writes in a note that the outlook remains unclear. Yet he thinks that the negative implications for book valuation and cashflow are priced in at current levels and that the stock's sell-off looks overdone. Credit Corp. is trading at just nine to 10 times prospective earnings, he adds. Morgans cuts its target price for the stock by 20% to A$18.75. Shares are up 3.4% at A$12.45. (stuart.condie@wsj.com)

0109 GMT - Corporate Travel Management 1Q update suggests it could exceed expectations for the fiscal year, but some caution on the outlook is due, UBS analyst Tim Plumbe says. He sees potential for the Australian travel services provider to beat his FY 2024 Ebitda forecast of A$268 million, and writes in a note to clients that A$283 million-A$301 million looks possible. Yet he makes only minor changes to his EPS forecasts, calling out factors including the Israel-Hamas conflict that cloud 2H earnings visibility. UBS keeps a A$25.60 target price and buy rating on the stock, which is down 2.2% at A$16.71. (stuart.condie@wsj.com)

0057 GMT - The appeal of term deposits relative to Netwealth's cash transaction account and equities remains a headwind to its margins and net flows, Macquarie analysts say in a note. But they reckon that as the Australian wealth-management platform provider launches new products and features, the impact of these headwinds should fade. Even so, Macquarie notes that high gross outflows continue to weigh on Netwealth's net flows. "We expect gross outflows to remain elevated in the near term until new platform features become implemented and adopted. Recent market volatility is also likely to impact flows in the current quarter," it says. The investment bank cuts the stock's target price 2.1% to A$14.20. Netwealth falls 4.6% to A$13.00. (alice.uribe@wsj.com)

0047 GMT - Nick Scali recoups its outperform rating from Macquarie analysts on the prospect of improving gross margins from improved sourcing and lower freight costs. The Macquarie analysts, who in February had cut their recommendation on the stock to neutral, also raise their 1H sales forecasts after the Australian furniture retailer's profit guidance for the period beat their forecast by 14% at the midpoint range. They are positive on the company's outlook despite headwinds from deteriorating consumer sentiment, lifting both their fiscal 2024 and fiscal 2025 EPS forecasts by 8%. Macquarie raises the stock's target price 3.3% to A$12.60. Shares are up 2.8% at A$10.67. (stuart.condie@wsj.com)

0040 GMT - ARB's effort to resolve concerns in the U.S. help Citi analyst Sam Teeger turn bullish on the Australian supplier of auto parts. Teeger upgrades his recommendation on the stock to buy from sell, stressing his support for ARB's US$5 million investment in the Off Road Warehouse retail chain. He says the move should give ARB further control over retail distribution. Teeger also notes ARB's optimism over the potential impact on its business of the Toyota Tacoma Trailhunter truck, which he says will include factory fitted ARB parts. Citi raises the stock's target price 44% to A$35.18. Shares are down 3.05% at A$29.60. (stuart.condie@wsj.com)

0031 GMT - Australian banks have a poor success rate in meeting their medium-term targets, according to Macquarie analysis on the success rate for management's predictions. Overall, Macquarie analysts say in a note that Australian lenders have a poor track record, especially for longer-dated forecasts. Cost-out and return on equity are amongst the least successful categories. "Our analysis highlights that banks tend to deliver lower quality earnings when they have a greater focus on meeting targets," says Macquarie, noting that the major banks have essentially all walked away from their expense targets. Conversely, regional banks' persistence with unrealistic targets leaves ongoing risk to consensus expectations, with the quality of regional bank earnings significantly lower than the majors. Macquarie maintains underperform calls on BOQ and Bendigo. (alice.uribe@wsj.com)

0011 GMT - The magnitude of the slowdown at EVT Group's Thredbo ski resort appears to be greater than expected by analyst Sam Teeger at Citi. He writes in a note that it is hard to accurately assess EVT's 1Q earnings given lease-accounting adjustments, but thinks that the warm-weather driven slowdown at its Australian ski resort is even larger than anticipated. Teeger would like to be able to gauge the impact of weak consumer sentiment on the slowdown. Citi has a neutral rating and A$13.00 target price on the stock, which is up 0.9% at A$10.59. (stuart.condie@wsj.com)

0007 GMT - Insurer QBE's upcoming 3Q FY 2023 update is likely to show strong operating conditions and a continuation of solid commercial pricing, say Morgan Stanley analysts in a note. Still, the investment bank also reckons there may be modest downside risk for its crop segment, with prices weaker amid the U.S. drought lingering in QBE's key crop states. While bond yields are holding up better than expected, 3Q catastrophe costs look harder to pin down, MS says. "There were few large catastrophes in the September quarter and we don't think QBE has any meaningful exposure to recent geopolitical events or the Canadian bushfires," says the investment bank, but it adds that it is wary of a possible accumulation of smaller to medium catastrophe events. (alice.uribe@wsj.com)

2340 GMT - Netwealth's 1Q FY 2024 funds flow was below UBS's forecasts, says analyst Scott Russell. He notes that UBS had been expecting an improvement in sector wide flows in the September quarter, as evidenced by Netwealth's rival Hub24. "This has not materialized for Netwealth as net funds flows of A$2 billion was lower versus in 2Q FY 2023 and 3Q FY 2022, and below our forecast A$2.7 billion," Scott says. Still, UBS reckons that flow should improve from here and keeps its buy rating. However it cuts its target price 1.2% to A$16.20. Netwealth falls 4.8% to A$12.98.(alice.uribe@wsj.com)

The outlook for Netwealth's net flows continues to be positive, say Wilsons analysts in a note. They note that 1Q FY 2024 outflows improved quarter on quarter, but see that outflows still remain higher than historical levels. Even so, Wilson says it still expects as the interest rate tightening cycle concludes outflow rates will further moderate and deliver a bounce in net funds flow growth. "Short-term noise aside, we continue to see a constructive outlook for Netwealth flows from a combination of healthy inflows and easing outflow rates," the broker says. Wilsons has an overweight call, but cuts its target price 5.6%, to A$15.38. Netwealth was last down 7.8%, to A$13.63. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

October 20, 2023 00:16 ET (04:16 GMT)