0126 GMT - Commonwealth Bank's decision to step back from the mortgage market due to heightened competition and to preserve margins is liked by Goldman Sachs analysts Andrew Lyons and John Li, but they question if the extent of the Australian lender's valuation premium to peers is justified. CBA's business mix leaves it more exposed to the current competitive environment, they note. Also, while CBA has historically done a good job in balancing investment and productivity, GS doesn't reckon it can escape elevated FY 2024 cost pressures given heightened inflation. The investment bank reiterates its sell call on the stock. (alice.uribe@wsj.com)

0117 GMT - Commonwealth Bank's loan impairment expense for 1Q FY 2024, appears to be well below market expectations, says Morgans analyst Nathan Lead in a note. For 1Q, CBA reported LIE at A$198 million, equivalent to 9 basis points of average gross loans versus 13 bps in 2H FY 2023. "This run rate is well below market expectations, with Visible Alpha consensus targeting A$688 million for 1H FY 2024," Morgans says. It lowers its FY 2024 LIE for CBA by 23%, and by 1% in FY 2025-26. Morgans has a hold call on the stock, but cuts its target price 5% to A$92.70. CBA is 0.5% higher at A$102.80. (alice.uribe@wsj.com)

0107 GMT - Telstra may need to spend even more on its fiber network to meet what Jefferies analyst Roger Samuel calls Australia's insatiable demand for data. Samuel welcomes the information provided by Telstra at its recent investor day, calling attention to the fact that the local telecommunications giant is considering Perth-Darwin and Brisbane-Darwin fiber routes if demand supports them. Telstra's network is attracting a lot of interest from hyperscale cloud providers due to AI demand, he adds in a note. Samuel trims the stock's target price 2.8% to A$4.47 but keeps its buy rating, saying it remains a core portfolio holding in current macro conditions. Shares are down 0.3% at A$3.86. (stuart.condie@wsj.com)

0051 GMT - NIB's update covering July-October shows a buoyant topline and presents a 'solid start to FY 2024,' but is less clear on claim trends, says UBS analyst Scott Russell in a note. For example, in the Australian Residents division, policy numbers rose by 1.3% since June, in line with UBS forecasts, and imply growth is tracking towards the top end of NIB's FY 2024 guidance range of 3%-4%. Travel is more pressured and UBS expects soft travel volumes to continue until 2H FY 2024. While the health insurer didn't provide detail on claims cost or margins performance in its update, UBS keeps its buy rating with earning forecasts remaining above consensus.(alice.uribe@wsj.com)

0041 GMT - Costume-jewelry retailer Lovisa appears to be increasing the pace of its store rollout, but Citi thinks more work needs to be done to achieve consensus estimates for the network. Lovisa opened 21 new stores in the first seven weeks of FY 2024, before accounting for any closures. In a note, Citi estimates that another 31 stores opened in the subsequent 11 weeks to early November. Still, Lovisa would need to accelerate openings materially over November and December to meet consensus forecasts of a global network of 880 stores by the end of 1H, analyst Sam Teeger says. That "could be difficult for the company to achieve, noting this implies 18 stores per month in the final eight weeks to meet estimates," Citi says. (david.winning@wsj.com; @dwinningWSJ)

0032 GMT - Suncorp's bank earnings may face downside risks in the near term, says UBS analyst Scott Russell in a note. Suncorp's bank loans data for the September quarter, implied a sharp slowdown in volume growth, which is below UBS expectations, he notes. Meanwhile, term deposits and savings balances rose, while cheaper transaction deposits declined. "Suncorp's release continues numerous references to 'intense competition.' These are clear negative implications for net interest margin, with downside risk to our 1H FY 2024 NIM forecast of 185 basis points," UBS says. However, UBS maintains its buy rating on valuation grounds and improving general insurance margins. (alice.uribe@wsj.com)

0026 GMT - Costume-jewelry retailer Lovisa's sales performance in recent months may be weaker than investors think, says Macquarie, which trims its EPS forecasts for the company slightly. In a note, Macquarie says it estimates Lovisa's like-for-like sales will fall by 3% in 1H, which is steeper than the 2.1% drop indicated by consensus forecasts. "Should these soft trends persist, downside risk may exist," says Macquarie, which has a neutral call on the stock. Lovisa said in August that its sales had been measuring up against widespread price rises that were implemented in April 2022. It is due to hold its annual meeting of shareholders on Friday. "Weaker demand may now be another driver of soft like-for-likes heading into the AGM and 1H result," says Macquarie. (david.winning@wsj.com; @dwinningWSJ)

0016 GMT - Ramsay Health Care's sale of its Asia-focused JV with Sime Darby for around A$2 billion improves its balance sheet, but investors shouldn't hope for a big improvement in margins, Macquarie says. Ramsay can expect net proceeds of A$895 million from the sale of the JV to TPG-backed Columbia Asia, which it will initially use to repay debt, the bank says in a note. "Despite an improved balance-sheet position, digital investment will constrain margin improvement, with valuations fair at current levels," Macquarie says. It highlights that Ramsay's digital investment will have a negative net impact of A$60 million-A$70 million in FY 2024, and slightly more in FY 2025. (david.winning@wsj.com; @dwinningWSJ)

0015 GMT - Seek's ability to reiterate its annual guidance despite moderating job ad volumes is seen as a positive by UBS analyst Lucy Huang. She writes in a note to clients that the 19%-20% decline in new job ad volumes seen so far in fiscal 2024 suggests yield in the high single digits at least. The Australian employment marketplace is also benefiting from currency moves, she adds. UBS has a neutral rating and A$26.50 target price on the stock, which is up 5.3% at A$23.16. (stuart.condie@wsj.com)

0011 GMT - CBA's 1Q FY 2023 margins were more resilient than peers, but did come at the cost of market share losses in mortgages, say Macquarie analysts in a note. For 1Q, CBA continued to shed mortgages, with balances declining by A$4.5 billion, supporting its margin performance. "We continue to believe that CBA will have to meet the market on price, and lending margin headwinds will likely return in 2H FY 2024," says Macquarie. At the same time, Macquarie says the key risk for the lender is still its ability to manage deposit margins as higher rates led to price competition and customer behavioral changes. The investment bank has an underperform call on the stock, as it thinks CBA has limited scope to grow earnings amid lower retail banking returns. (alice.uribe@wsj.com)

0007 GMT - Flight Centre's earnings guidance and 1Q trading update suggests there's risk to consensus 1H earnings forecasts, says RBC analyst Wei-Weng Chen. Flight Centre expects an underlying pretax profit of A$270 million-A$310 million in FY 2024. But in a note, RBC says consensus expectations for 1H pretax profit are A$111 million. "We believe this suggests risk to consensus based on Flight Centre's 1Q pretax profit of A$54 million and guidance that 2Q pretax profit will be lower," says RBC, which rates the travel agency at sector perform. (david.winning@wsj.com; @dwinningWSJ)

0007 GMT - Aristocrat Leisure's intention to maintain its elevated level of design and development expenditure in fiscal 2024 shows the Australian gaming company investing significantly in further growth, Jefferies analyst Simon Thackray says. Noting that fiscal 2023 segmental earnings were about 1% below his forecast, Thackray uses a note to clients to call attention to Aristocrat's outlook. He points out that fiscal 2023 design and development expenditure accounted for 13% of sales, which was well above the company's 11%-12% target. This will persist in fiscal 2024, he adds. Jefferies has a A$39.48 target price and a hold rating on the stock, which is down 1.2% at A$39.39. (stuart.condie@wsj.com)

2352 GMT - Aristocrat Leisure's higher-than-expected spending on design and development takes a little of the shine off the Australian gaming company's strong FY 2023 result, according to Citi analyst Adrian Lemme. He is positive on the strength of Aristocrat's gaming business across the 12 months through September. Yet he writes in a note that its final dividend was lower than he had forecast. He also points out that FY design and development expenditure represented 13% of sales, compared with guidance for about 12%. Aristocrat expects this elevated expenditure to persist in FY 2024, he adds. Citi has a A$42.80 target price and a buy rating on the stock, which is down 2.0% at A$39.08. (stuart.condie@wsj.com)

2227 GMT - CBA's earnings drivers and balance sheet settings were all in line with Morgan Stanley forecasts in 1Q FY 2024, the investment bank's analysts say in a note. It calls out lower home loan balances for that quarter, which helped mortgage margins to stabilize. "In our view, this will provide some reassurance on the margin outlook, even though home loan balances were down around A$4.5 billion in the quarter," the analysts say. The investment bank estimates that CBA's margin fell 5 basis points versus 2H FY 2023m and 3 basis points quarter on quarter, mainly to deposit pricing and changes in the mix of types of deposits. At the same time, for 1Q, there were no surprises on loan losses, credit quality or capital. (alice.uribe@wsj.com)

2158 GMT - AMP's cost-out program announced at 1H FY 2023 needs an aggressive approach, aiming for maximum retention to the bottom line, says Jefferies analysts Simon Fitzgerald and William Richardson in a note.The Australian wealth manager is targeting A$120 million in cost reductions by FY 2025, resulting in controllable costs reducing to A$620-$640 million. "In our view, investors will need to see the maximum amount of cost savings convert to net profit in order for the program to be considered a success," says Jefferies which assumes 92% of AMP's cost target is achieved by FY 2025. (alice.uribe@wsj.com)

2153 GMT - CBA is "priced to perfection" amid pressure on both lending and deposits, says Jefferies analyst Matthew Wilson in a note. This comes as the investment bank maintains a cautious outlook for businesses and over-indebted households, as it looks that there will be higher rates for longer due to sticker inflation. Wilson notes that in Australia, home and business lending remains intensely competitive, while on the deposit side, savers are looking to take advantage of the higher-for-longer environment. Against this backdrop, Jefferies reckons that CBA's disciplined approach to volume and margin is likely to disappear, as lenders seek to win lost share. Jefferies has a A$80.00 target price on the stock. CBA was last up 1.0% to A$102.28. (alice.uribe@wsj.com)

(END) Dow Jones Newswires