0242 GMT - Sezzle's 3Q performance was largely in-line with expectations for Ord Minnett analyst Phillip Chippindale, who is pleased by the installment-payment provider's improved capital position and high level of spending per customer. He tells clients in a note that while income margins were slightly weaker than he would have liked, that was countered by high underlying merchant sales. He doesn't expect the quarterly update to significantly move market expectations but nonetheless looks forward to Sezzle's seasonally strong 4Q. Ord Minnett's buy rating and A$41.90 target price are under review. Shares are unchanged at A$14.28. (stuart.condie@wsj.com)
0050 GMT - BHP will spend more on the second stage of its Jansen potash project in Canada versus Morgan Stanley's expectations, its analysts say in a note. The miner late Tuesday approved a $4.9 billion investment in the project's second phase, 14% higher than MS's $4.3 billion forecast. The analysts say they had expected higher so-called synergies with the project's first stage. Other metrics were mostly in line with expectations, they say. "We see this announcement as having negligible/small negative impact" based on MS's estimates, although consensus estimates for stage-two capital expenditure are unavailable, they add. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0009 GMT - Dicker Data's 32% share-price gain in the three months through October prompts UBS analyst Apoorv Sehgal to cut his recommendation on the stock to neutral from buy. The Australian IT hardware supplier's 3Q trading update was stronger than Sehgal had anticipated, but he writes in a note to clients that he expects margins to moderate in 4Q. He raises his EPS forecasts for the next three fiscal years by 4.5%, 4.4% and 3.7%, respectively, and increases the stock's multiple to 21 from 19 times one-year forward earnings. This drives an 8.3% increase in target price to A$10.40, which isn't enough to justify continued bullishness. Time for a breather, Sehgal says. Shares are up 0.2% at A$10.58. (stuart.condie@wsj.com)
0000 GMT - The departure of Data#3's CEO isn't ideal but it's good that his replacement is an experienced company insider, UBS analyst Apoorv Sehgal writes in a note. Sehgal points out that the departure of well-regarded CEO Laurence Baynham comes soon after exit announcements by the Australian IT services provider's chairman and CFO, but takes some comfort from the fact that his replacement, Brad Colledge, has been with Data#3 for 28 years. Colledge steps up from a role as executive general manager of software, infrastructure and services. UBS has a buy rating and A$8.20 target price on the stock, which is up 2.2% at A$6.92. (stuart.condie@wsj.com)
2331 GMT -- Inghams's stronger-than-expected 1H earnings are probably being driven by temporary conditions than a structural change in the poultry producer's profitability, Goldman Sachs analyst Chris Gawler says. Inghams expects 1H underlying earnings of A$138 million, compared with a prior GS forecast of A$107 million. Gawler writes in a note that this likely relates to a robust pricing environment and recovery in volumes. He expects Inghams will need to keep raising prices to protect margins, and sees challenges from a softening economic environment and falls in prices of other proteins. GS raises target price 5.2%, to A$3.05, and keeps a sell rating on the stock, which is up 0.4%, at A$3.695. (stuart.condie@wsj.com)
2316 GMT -- Jefferies analyst Michael Simotas queries the timing and price of Treasury Wine Estates' latest acquisition. He writes in a note to clients that the US$1 billion that Treasury could end up paying for California's DAOU looks like a full price, and points out that the deal wasn't the result of any competitive process. Simotas also wonders why the Australian producer didn't wait for more clarity on China's intentions regarding tariffs on Australian wine before making the move. Treasury may have secured cheaper equity capital had it waited, he says. Jefferies raises target price 3.7%, to A$14.00, and keeps a buy rating on the stock, which is in a halt at A$12.10. (stuart.condie@wsj.com)
2306 GMT -- There's lots to like about Adore Beauty, says Citi, but the online retailer remains a risky bet. In a note, analyst James Wang says Adore Beauty ranks highly in terms of customer engagement, product pricing and a superior delivery experience relative to retailers that aren't online specialists. Citi also thinks beauty and personal care will be one of the fastest growing categories for online retail. It starts Adore Beauty at buy/high risk with a A$1.25/share price target. "The High Risk rating reflects near-term uncertainty around margins, as well as lack of exclusive brands relative to competitors," Citi says. "The main thing we will be watching is how quickly Adore Beauty could return to profit." Adore Beauty ended Tuesday at A$1.04. (david.winning@wsj.com; @dwinningWSJ)
2257 GMT -- There are pluses and minuses to Vicinity Centres's decision to buy out its partner in the Chatswood Chase mall, Morgan Stanley suggests. Positively, Vicinity can proceed with the A$620 million redevelopment, which MS considers to be strategically required given the mall looks tired and Scentre recently completed a A$110 million upgrade of the adjacent Westfield mall in 2015. "We would be satisfied if the proposed >6% yield is achieved, given the sufficient margin above incremental cost of debt, and also the end result of turning the centre into the only luxury suburban mall in Sydney's North," analyst Simon Chan says. But the less attractive feature of the deal is that wholly owning Chatswood Chase means Vicinity loses out on development and ongoing asset management fees, MS says. (david.winning@wsj.com; @dwinningWSJ)
2242 GMT -- Unlike other online retailers, Temple & Webster benefits from a lack of marketplace competition, Citi says. The bank starts Temple & Webster at buy with a A$6.50/share price target partly because the furniture retailer is likely to face limited competition from Amazon for some time. Also, brands aren't as embedded in the furniture category, so newer entrants aren't "locked out" of key products, analyst James Wang says in a note. "Both our survey and web traffic data point to Temple & Webster being preferenced well ahead of other online pureplay retailers in the space," Citi says. "Near-term momentum is strong and the A$1 billion revenue target is achievable." Temple & Webster ended Tuesday at A$5.59. (david.winning@wsj.com; @dwinningWSJ)
2234 GMT -- Citi analyst Sam Teeger wouldn't be surprised to see China scrap Australian wine tariff much sooner than expected. Teeger writes in a note that, while China's expedited review of duties is expected to take five months, it is possible that positive news could be delivered to coincide with Australian Prime Minister Anthony Albanese's Nov. 4-7 visit to China. Treasury Wine Estates has already said it is staging its fiscal 2024 shipments with the aim of capitalizing on a potential removal of tariffs. Citi has a neutral rating and A$13.00 target price on Treasury Wine shares, which are at A$12.10 ahead of the open. (stuart.condie@wsj.com)
2227 GMT -- Treasury Wine's acquisition of Californian producer DAOU could lift the Australian vintner's annual earnings by up to US$103 million by fiscal 2026, Goldman Sachs analysts say. They tell client in a note that, assuming annual synergies of between US$10 million and US$20 million, they see fiscal 2025 earnings before interest, tax and one-off items rising by between US$81 million and US$93 million. They then anticipate an uplift of between US$98 million and US$103 million in fiscal 2026. GS has an unchanged A$13.40 target price on the stock, which is at A$12.10 ahead of the open. (stuart.condie@wsj.com)
2223 GMT -- UBS is no longer bearish about Vicinity Centres, partly because the Australian economy has so far shown surprising resilience with unemployment around a 50-year low, migration at a record level, and wages moving higher. In a note, analyst Grant McCasker also says support for Vicinity Centres's valuation is emerging with the mall owner able to maintain a strong balance sheet despite higher capex commitments. Vicinity likely has A$400 million of capex in FY 2024 and A$500 million in FY 2025. However, UBS thinks it could be rewarded for funding its development pipeline from asset sales, noting it has put A$200 million-A$250 million of smaller malls up for sale. "Investors continue to favor Reits with solid capital positions given the 'higher for longer' rate outlook," UBS says. (david.winning@wsj.com)
2203 GMT - Citi is a touch more conservative about Alumina's output in coming years. In a note, analyst Paul McTaggart lowers a forecast for the company's alumina volumes in 2024 and 2025 by 13%-15%. Citi also expects Alumina's net debt to peak at around US$282 million at the end of this year, then moderating in 2025. "Lower production should result in a working capital reduction," Citi says. "So we don't see a requirement for Alumina to raise equity capital given it has a US$500 million debt facility." Citi trims its price target on Alumina's stock by 12% to A$1.15/share. Alumina ended Tuesday at A$0.78. (david.winning@wsj.com; @dwinningWSJ)
2201 GMT - Kogan.com gets a new bear in Citi, which frets about its transition toward a fully fledged marketplace at a time when Amazon and Temu are accelerating their Australian expansion. "The competitive landscape for marketplaces in offshore markets leave little room for domestic competitors and Australia may go that way too," analyst James Wang says in a note. Still, Kogan.com has some gems in its portfolio of businesses, Citi says. The bank views Mighty Ape favorably, given it thinks Amazon isn't likely to prioritise expansion into New Zealand. Citi starts Kogan.com at sell with a A$4.00/share price target. Kogan.com ended Tuesday at A$4.38. (david.winning@wsj.com; @dwinningWSJ)
148 ET - Packaging company Amcor's 1Q earnings continued to be supported by positive price trends, but Jefferies questions how long this can continue. Amcor reported quarterly Ebit of US$357 million, roughly in line with Jefferies's forecast. But in a note, analyst Richard Johnson highlights that volumes remain very weak and lower raw-material costs now appear to be passed through to customers. "Given the extended period of volume weakness, the ongoing net benefit from price/mix is interesting and may not be sustainable," Jefferies says. While the dividend was lifted marginally by 2%, the bank says "this needs to be looked at in the context of the 14% fall in EPS and the rise in balance sheet leverage to 3.3x." (david.winning@wsj.com; @dwinningWSJ)
(END) Dow Jones Newswires