0359 GMT - Fuel refiner and retailer Viva Energy offers investors "extraordinary value" at current levels, according to Macquarie analysts. They write in a note that the impending A$1.15 billion acquisition of convenience and fuel-station chain OTR promises catalysts for Viva's shares, with management having outlined potential EPS accretion of up to 26% compared with FY 2021 on a pro-forma basis. Viva's 3Q convenience and mobility sales volumes were 2.6% weaker than Macquarie had anticipated, although the analysts note that the current 4Q is traditionally stronger. They trim the target price by 2.8% to A$3.50 but maintain an outperform rating on the stock, which is up 3.7% at A$2.83. (stuart.condie@wsj.com)

0357 GMT - Forecasts and company statements point to solid global travel volume conditions for Australia leading into 2024, despite some risk around Middle East tensions, Canaccord Genuity analyst Allan Franklin says in a note. As a result, CG keeps its near-term forecasts and retains its favorable views on Ardent Leisure, Experience and Kelsian Group. It thinks the three companies willbenefit from more buoyant international visitation to Australia. CG notes that relative to the ASX 300, the ASX-listed travel sector is presenting marginally cheaper than historical averages, while consensus FY 2024 expectations still indicate some more volatility and weakness in near-term trading, which CG reckons is understandable given the macro context. (alice.uribe@wsj.com)

0349 GMT - Commentary by Philips management regarding a lack of significant discounting in breathing tech looks positive for rival ResMed, according to Citi analyst Mathieu Chevrier. He also observes in a note to clients that Philips doesn't see a major impact on demand from weight-loss drugs that some analysts have warned could lead to a significant proportion of patients dropping CPAP treatment. Chevrier thinks these fears are overdone. Citi forecasts US$1.57 in 3Q EPS when ResMed reports its result this week. Citi has a buy rating and A$39.00 target price on the stock, which is down 2.0% at A$22.98. (stuart.condie@wsj.com)

0338 GMT - Morgan Stanley analysts will be looking for any insight into the impact of weight-loss drugs on demand at ResMed when the breathing-tech provider reports its 1Q results. The MS analysts have already estimated a 12% hit to ResMed's fiscal 2028 revenues due to the possibility that the drugs allow potentially millions of CPAP therapy patients to cease treatment. Their estimates are based on multiple assumptions and they would like more clarity. MS anticipates 1Q revenue of US$1.14 billion for the company, with US$407 million from U.S. devices. MS has an equal-weight rating and A$27.70 target price on ResMed's Australia-listed shares. The stock is down 2.0% at A$22.98. (stuart.condie@wsj.com)

0309 GMT - The conflicts in Ukraine and the Gaza Strip are driving demand for Droneshield's products and technology, Bell Potter analyst Daniel Laing says. He writes in a note that the Australia-listed defense-technology provider's outlook remains positive, pointing to a A$51 million contracted order backlog and A$400 million sales pipeline. Laing lifts his annual revenue forecasts for the three years through 2025 by as much as 7%, largely offsetting dilution from the exercise of performance-related options. Bell Potter has a buy rating and target price of A$0.45 on the stock, which is down 3.5% at A$0.275. (stuart.condie@wsj.com)

0225 GMT - Australia-listed Syrah Resources could benefit from China's plans to restrict graphite exports. The company is the only natural graphite producer outside China of scale, though current production at its Balama graphite operation in Mozambique is well below a 350,000-metric-ton annual capacity due to industry headwinds, Macquarie analysts say in a note. "We believe SYR could benefit from increased ex-China demand" and the ramp-up of its downstream active anode material facility in the U.S., the analysts say. China dominates natural graphite production, accounting for roughly 73% of global supply, according to Macquarie. Syrah is down 4.7% in Sydney at A$0.715, pulling lower after a surge earlier in the session and a 42% jump Monday. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0116 GMT - Citi has turned bullish on Australia's BlueScope Steel despite a recent downgrade to earnings guidance, citing a retreat in the steelmaker's stock in recent months. In a note, the bank's analysts say BlueScope "is still a steel volume growth story backed by a super strong domestic position in Australia." They upgrade the stock to buy from neutral, although trim their target to A$21.40 from A$23.50. "With U.S. HRC [hot-rolled coil] spreads now bottomed out and Australian domestic steel dispatches holding up, the 16% share price pullback in the last six months has provided a value opportunity," the analysts say. BlueScope, which traded as high as A$22 as recently as September, is up 1.8% in Sydney at A$18.41. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0040 GMT - Strength in metallurgical-coal markets and a potential bottoming in aluminum prices don't appear to be reflected in South32's stock, say Jefferies analysts. They initiate coverage of the miner's Australian shares with a buy rating and A$4.40 target. They reckon there could be consensus upgrades through FY 2024 due to those trends, adding that the implied NPV of the company at spot commodity prices is more than 20% higher than where the stock trades now. "South32 is trading at FY25 EV/Ebitda of 4.8x and FY25 P/CF at 5.8x, at least one turn lower than global peers," say the analysts. South32 is down 0.9% in Sydney at A$3.24. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2359 GMT - Centuria Industrial REIT's net tangible assets could be more resilient than those of its peers, Morgan Stanley analysts say in a note looking at the investment vehicle's 1Q FY 2024 operating update. In the update, Centuria reaffirmed its FY guidance, and MS notes that with continuing strength in industrial markets, Centuria is booking average leasing spreads of 48% across around 53,000 square meters of space. Centuria also confirmed that it has divested itself of two assets in Victoria for a combined A$70 million, in line with the June book value. "This is now in line with Centuria's guidance for A$50-100 million of sales in FY 2024," says MS. It is equal weight on the stock, but sees continued positive trends in industrial rents. (alice.uribe@wsj.com)

2332 GMT - Ansell's lack of visibility on demand and inventories still prevent Citi analyst Mathieu Chevrier from becoming more positive on the protective-garment manufacturer despite management's confidence that surgical and life-science market conditions will soon start to normalize. He highlights the company's commentary that inventory reduction by its channel partners will begin to normalize in 2H of the current fiscal year. Chevrier adds in a note that the market appears to be pricing in only 50% of Ansell's annualized cost savings target by fiscal 2026. Citi has a neutral rating and A$26.00 target price on the stock, which is down 1.1% at A$21.515. (stuart.condie@wsj.com)

2332 GMT - Zip Co.'s expanding revenue margin in Australia and New Zealand is viewed by RBC Capital Markets analyst Wei-Weng Chen as a notable highlight of the buy-now-pay-later operator's 1Q results. Chen writes in a note to clients that the material improvement performance in margins in Zip's home markets was the driver of what he calls very strong margins at group level. Zip's improved outlook is another positive. Chen does flag a drop in active customer numbers from the year-earlier period as a possible concern, but also notes that the tightening of risk settings should improve 2H bad debts in Australia and New Zealand. RBC has a sector-perform and A$0.50 target on the stock, which is up 10% at A$0.33. (stuart.condie@wsj.com)

2319 GMT -- Propel Funeral Partners may have the potential for a significant re-rating, say Morgan Stanley analysts in a note. This comes as the investment bank sees that the stock offers defensive demand, pricing power and share growth, and now has greater conviction on the FY 2024 outlook with unexpected guidance at the FY 2023 result in August. Propel on Monday said it had gotten inbound interest regarding a potential change of control transaction from multiple parties. It has appointed defense advisers, but stated that none of the interest to date has been compelling. "We flagged the logic for potential strategic interest in calling out Propel as a key pick from August reporting season," says MS which reiterates its overweight call. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

October 24, 2023 00:01 ET (04:01 GMT)