0354 GMT - JB Hi-Fi's 1Q sales suggest that the entertainment retailer is benefiting from a more resilient category mix compared with rival Harvey Norman, Citi analysts say. JB Hi-Fi is outperforming market expectations, but the Citi analysts say in a note that they are cautious on its 2Q prospects due to the potential for central-bank rate rises to dampen consumer enthusiasm in what is a key trading period. They point out that Reserve Bank of Australia rate increases in November and/or December would be poor for an electronics industry banking on a strong holiday trading period. Citi trims its target price by 5.9% to A$48.00 and stays neutral on the stock, which is up 1.5% at A$44.69. (stuart.condie@wsj.com)

0348 GMT - Brambles may yet upgrade its FY 2024 guidance despite the prospect of moderating revenue growth through the year, Macquarie analysts say in a note. They anticipate revenue moderating sequentially on a quarterly basis, but still think the Australian pallet company's business model supports price increases. They reckon that February's 1H results announcement is when Brambles could raise its recently reiterated guidance for 6-8% annual sales revenue growth. Macquarie lifts its target price 1.6% to A$15.70 and keeps an outperform rating on the stock, which is down 4.7% at A$13.32. (stuart.condie@wsj.com)

0229 GMT - Coronado's worse-than-anticipated 3Q cost and cash numbers have disappointed Jefferies analysts, who say the miner will need to post a material improvement in 4Q to meet its full-year cost guidance. Still, the market was expecting a weaker quarter of production, note the analysts, who have a buy rating and A$2.55 target on the stock. They say metallurgical coal remains one of their preferred commodities in the near-term "due to upside risk to Chinese demand, strong demand in India, a lack of supply growth, and the risk of weather-related supply disruptions from over year-end into 2024." Coronado is up 2.9% at A$1.75/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0208 GMT - Brambles's 1Q sales growth was much stronger than Morgans analyst Alexander Lu had expected. He trims his EBIT forecasts for fiscal 2024 and fiscal 2025 by 2% and 3%, respectively, after tempering price and volume expectations, but keeps a hold rating on the stock. Lu writes in a note that price rises are getting harder to foist upon customers as inflation moderates and underlying consumer demand weakens in the pallet supplier's key markets. He still likes Brambles's defensive qualities and thinks the stock is trading at close to fair value. Target price falls 4.8% to A$14.95. Shares are down 4.2% at A$13.395. (stuart.condie@wsj.com)

0201 GMT - Citi analyst Samuel Seow turns bearish on Brambles amid concern that the pallet supplier's guidance implies that price growth could be at zero by the end of fiscal 2024. Seow, who was bullish on the stock as recently as August, cuts his recommendation to sell from neutral. He writes in a note that, given that 1Q sales grew 13% on year, Brambles's unchanged fiscal 2024 guidance implies average revenue growth slows to mid-single digits for the rest of fiscal 2024. Higher volumes mean that pricing growth could be lower than revenue growth, and even exit fiscal 2024 flat. Citi cuts the stock's target price 18% to A$13.15. Shares are down 4.2% at A$13.395. (stuart.condie@wsj.com)

0105 GMT - Megaport's operating metrics should rebound in 4Q thanks to its hiring of new sales staff, Goldman Sachs analyst Kane Hannan writes in a note. He sees the Australian communications-tech provider's 1Q results in broadly positive terms, highlighting the fact that annual recurring revenue growth of 36% was close to the 39% seen in the prior three months. The soft operating metrics that drove a 16% share-price fall were to be expected, he adds. GS trims the stock's target price 2% to A$11.90 and keeps its buy rating, despite Hannan's expectation of marginally lower near-term earnings. Shares are down 1.35% at A$9.50. (stuart.condie@wsj.com)

0059 GMT - Megaport needs to provide investors with signs that sales are accelerating if its shares are to get close to where Morgans analysts think they should be. The analysts see the 16% share-price drop that followed the company's 1Q results as unwarranted, but market sentiment drives a 23% cut in their target price to A$10.00. They tell Morgans clients in a note that marginal buyers are unlikely to be attracted by what look like a challenging few quarters ahead. Their A$13.00/share valuation is unchanged by the Australian communication-tech provider's weak 1Q KPIs. They maintain a hold rating on the stock, which is down 1.0% at A$9.535. (stuart.condie@wsj.com)

0042 GMT - Coles keeps its bull at Citi after a 1Q sales update that improves confidence in the supermarket chain's ability to combat product theft. Analyst Adrian Lemme cheers the successful initial rollout of tech to combat theft, noting that Coles will expand its use to about 30% of its stores by the end of December. Given that the most vulnerable stores are being targeted, Lemme thinks this will result in a meaningful reduction in 2H stock loss. He writes in a note that 1Q sales fell short of his expectations, but keeps a buy rating on the stock. He cuts the target price 4.4% to A$17.50. Shares are up 2.7% at A$15.38. (stuart.condie@wsj.com)

0036 GMT - Megaport's investment in new sales staff indicates to Macquarie analysts that the Australian communications-tech company's margins may get worse before they get better. They estimate the annual run-rate operating expense impact of hiring 20 sales heads at about A$9.5 million. The analysts nonetheless tell clients in a note that they are unperturbed by Megaport's soft 1Q key performance indicators and remain focused on its medium-term opportunity. Annual revenue guidance still looks conservative, they add. Macquarie maintains an outperform rating and A$14.10 target price on the stock, which is down 0.6% at A$9.57. (stuart.condie@wsj.com)

2351 GMT - Australian insurance broker company Steadfast's stock may remain rangebound with few surprises in its annual meeting commentary, says E&P analyst Olivier Coulon in a note. While E&P views Steadfast's 1Q FY 2024 trading update as solid, it reckons the market may have been expecting more details of the growth opportunity from Steadfast's recent acquisition of the ISU Group. "Steadfast has provided limited additional commentary re ISU Group," says E&P adding that the information provided in the AGM commentary "doesn't add materially to our confidence or understanding of the opportunity beyond that which we had already built into our longer term forecasts upon acquisition." Steadfast is up 0.3% at A$5.61.(alice.uribe@wsj.com)

2347 GMT - Harvey Norman's 1Q sales in Australia and New Zealand fell short of E&P analyst Phillip Kimber's expectations. He reckons that the market will cut fiscal 2024 earnings forecasts by 5%-10% on the 1Q trading update. Kimber writes in a note that property revaluations make it hard to reconcile the market's outlook with his forecasts, but he thinks that the average analyst forecast is for a 20% drop in fiscal 2024 net profit, excluding the property impact. He currently expects a 22% fall. Shares rise 2.0% at A$3.62. (stuart.condie@wsj.com)

2256 GMT -- The main risk in Whitehaven's purchase of two Australian coal mines from a BHP-Mitsubishi joint venture is the scale of the operations at one of those operations, known as Blackwater, Citi analyst Paul McTaggart says in a note. "While WHC will retain BHP Blackwater staff, it is a 7 dragline operation across 80 [kilometers] of strike incorporating 8 separate pits and presents an entirely different scale of logistical challenges to WHC management," McTaggart says. Whitehaven is assuming it can reducing operating expenses there, but draglines can have substantial sustaining capital expenditure requirements, he notes. (rhiannon.hoyle@wsj.com

2248 GMT -- While Insignia suggests brighter times ahead in FY 2025 and beyond, with a new CEO in place, Citi analyst Nigel Pittaway remains skeptical. He says in a note that due to Insignia's lower than forecast 1Q FY 2024 funds under management, it cuts the company's FY 2024 earnings per share by 5%. Citi also sees risk to Insignia's FY 2024 earnings before interest, taxes, depreciation, and amortization margin guidance, saying that it's based on normalized markets, with markets performing worse than this year to date. "So, we see risk to guidance and now forecast slightly below the implied range," says Citi. It keeps its neutral call, but cuts its target price 16%, to A$2.50. Insignia was last down 3.4%, to A$2.01. (alice.uribe@wsj.com)

2247 GMT -- Citi is raising its price target on Whitehaven after the miner inked a deal to buy two new coal operations, but analyst Paul McTaggart questions how high the stock can go given curtailed investor appetite for thermal coal used to generate power. Whitehaven shares are up roughly 26% from their September lows and McTaggart raises Citi's target on the stock to A$8.45 from A$7.60, but stays neutral rated. "The market has already re-rated the shares to some degree," he says. "Whether we can get a further re-rate from here is unclear given Australian institutional shareholder interest for a large scale circa 40% thermal coal play is yet to be proved." Whitehaven last traded at A$7.77. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

(MORE TO FOLLOW) Dow Jones Newswires

Details on the possible final investment decisions of the first one or two projects planned by Fortescue's clean-energy unit may be announced at the company's annual general meeting on Nov. 21, Goldman Sachs analysts Paul Young and Caleb Heiner say in a note. Fortescue has set a target of taking five clean-energy projects to a final investment decision by the end of 2023. The first of these is likely to be the Phoenix hydrogen hub in the U.S. and the Gibson Island ammonia project in Australia, say Young and Heiner. "FMG again stated they would like to retain 25-50% equity ownership of all hydrogen projects and will look to fund projects with 60/40 debt/equity," the analysts say. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0511 GMT - In the post-pandemic travel environment, Citi prefers business models that were impacted the hardest and are now improving versus Covid winners. Citi analyst Samuel Seow says in a note that his order of preference for Australian travel stocks is Flight Centre, Corporate Travel Management, Webjet and then Qantas. At the same time, Citi says outbound travel data shows that volumes are growing as prices decline, and international travel is overtaking domestic, long haul trips are growing faster than short, while airline competition is normalizing. "We estimate international travel continues to grow and could exceed pre-pandemic levels in 2H FY 2024," Citi says. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

October 27, 2023 00:00 ET (04:00 GMT)