0325 GMT - While Australian private health insurance policy growth was up 0.6% in 1Q FY 2024, it is still moderating, Jarden analysts say in a note, considering regulator data for the September quarter. The investment bank sees that policy growth is moderating more in the extras line, where cover is more discretionary, but still robust given strong population growth. Jarden reckons that the overall 1Q policy growth implies share loss for Medibank, but gains for Nib. Across listed private health insurers, while both Medibank and Nib are trading at around 17X price-to-earnings--a 10% discount to 10-year averages--Jarden prefers Medibank, which it has an overweight call on, given its more resilient medium-term PHI margins and lower regulatory risks. Jarden has a neutral rating on Nib. (alice.uribe@wsj.com)

0029 GMT - Appen loses coverage at Macquarie, where analysts reallocate resources following deteriorating revenue conditions at the Australian data-annotation provider. The analysts tell clients in a note that conditions have deteriorated since May, although management say October was the company's best month in 2023 and flagged a stronger performance in November and December. Appen's latest capital raise, priced at a 42% discount to its previous share price, represents about 35% of shares on issue, they add. Macquarie has a last-published underperform rating and A$1.02 target price on the stock, which is down 22% at A$0.67. Neither recommendation nor target price should be relied upon, Macquarie warns. (stuart.condie@wsj.com)

0026 GMT - There's no notable catalyst expected for SSR Mining's stock until February, when the gold producer is anticipated to provide updated technical reports, reserves and five-year guidance, UBS analyst Levi Spry says in a note. In the meantime, the company is entering a three-year investment cycle that will weigh on near-term earnings and free cash flow, Spry says. He cuts UBS's target on the miner's stock to A$20.00 from A$25.60, but says "we continue to see value in SSR's growth and optionality across its portfolio." He keeps a buy rating. SSR is down by 0.1% at A$17.18. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0022 GMT - Appen's need for a A$30 million capital raise in a weaker revenue environment underlines the amount of work still ahead in the data-annotation company's turnaround, Wilsons analysts say. Appen's year-to-date gross profit of US$80.4 million implies that it needs US$27.1 million over November and December to hit Wilsons' US$107.5 million full-year forecast. The Wilsons analysts point out that it averaged just US$6 million a month in the first four months of the December half. Appen says proceeds of the raise will provide balance-sheet flexibility as it seeks to return to profitability. Appen's latest heavily discounted raise represents 35% of shares on issue, Wilsons adds in a note. Wilsons has a last-published market-weight recommendation and A$1.61 target price on the stock, which is down 22% at A$0.67. (stuart.condie@wsj.com)

0011 GMT - Pacific Smiles' trading update turns Wilsons analysts from bulls into bears amid margin pressures on the Australian dental-services provider. The Wilsons analysts cut their recommendation on the stock to underweight from overweight, pointing to the flow-through impact of lower revenue expectation on earnings over the next three fiscal years. Patient fees are up 10.5% on year so far in fiscal 2024, well below Wilsons's 1H forecast of 12.5% growth. Wilsons lowers its full-year revenue projection for the company by 5% to A$179.1 million and cuts Ebitda expectations for the three fiscal years through FY 2026 by an average of 23%. It drops the stock's target price 47% to A$0.88. Shares are down 13% at A$0.94. (stuart.condie@wsj.com)

Australian private health insurer policyholder growth remains strong, says Morgan Stanley in an analysis of regulator data for the September quarter. The investment bank sees that participation is still growing, with data showing hospital-insured persons were up 2.3% in the September quarter versus the June quarter, which continues the positive growth observed since 2020. For hospital insured persons, they are up 7.2% from the March quarter 2020, with MS saying this is the highest absolute number it has on record since FY 1995. "We attribute the improvement to lower premium rises and an increased focus on health during the Covid-19 pandemic," says MS.

Medibank may need an acceleration of policyholder growth to meet guidance, say Morgan Stanley analysts in a note. The Australian private health insurer yesterday reiterated guidance for FY 2024 resident policyholder growth of 1.5% to 2.0%, but MS points out that year to October net resident growth of 0.3%, annualized at around 1.2%, may require an uptick in 2Q FY 2024. MS forecasts 1.7% resident policyholder growth for Medibank in FY 2024, noting that the company didn't provide an update on non-resident policyholder growth. At the same time, non-surgical claims remain below company expectations driven by structural changes, in line with MS thinking.

0003 GMT - Australian private health insurers' policyholder growth remains strong, Morgan Stanley says in an analysis of regulator data for the September quarter. The investment bank sees that participation is still growing, with data showing hospital-insured persons up 2.3% in the September quarter versus the June quarter, continuing the positive growth trend seen since 2020. Hospital insured persons were up 7.2% from the March quarter in 2020, the highest increase on record since FY 1995, MS notes. "We attribute the improvement to lower premium rises and an increased focus on health during the Covid-19 pandemic," MS says. (alice.uribe@wsj.com)

2345 GMT - Medibank may need an acceleration of policyholder growth to meet guidance, say Morgan Stanley analysts in a note. The Australian private health insurer on Wednesday reiterated guidance for FY 2024 resident policyholder growth of 1.5%-2.0%, but MS points out that year to October net resident growth of 0.3%, annualized at around 1.2%, may require an uptick in 2Q FY 2024. MS forecasts 1.7% resident policyholder growth for Medibank in FY 2024, noting that the company didn't provide an update on non-resident policyholder growth. At the same time, non-surgical claims remain below company expectations driven by structural changes, in line with MS's thinking.(alice.uribe@wsj.com)

Hospital claims catch up was weak in October, with this likely to soften inflationary pressure on the sector in 1H FY 2024, but may distract from other trends, say Macquarie analysts in a note. This view is based on Macquarie's proprietary index that tracks private hospital admission volumes and outlays as a proxy for hospital private health insurance claims growth. More widely, Macquarie forecasts PHI industry Net Margins to contract 30 basis points in 1H FY 2024 versus the 2H FY 2023. The investment bank is also tipping more significant contraction in 2H FY 2024, but notes that the various methodologies of PHI company give-backs relating to the pandemic make these figures increasingly difficult to compare across funds. (alice.uribe@wsj.com)

0418 GMT - Fortescue appears to be tackling its pipeline of clean energy projects more slowly than anticipated, which is a positive according to Macquarie analysts. Fortescue said previously it wanted to take a final investment decision--or FID--on five clean energy projects by the year-end. This week, before its annual shareholder meeting, it approved two. "We believe the FID of green ammonia projects could be delayed to CY24 or beyond, which would allow the project team to incorporate learnings from Gladstone PEM50 and Phoenix Hydrogen Hub," the analysts say. "The deferral could also reduce the cash flow pressure in the near term," given three other projects being considered have a combined capital expenditure that could be greater than $6.2 billion, the analysts say. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0400 GMT - Macquarie analysts are cautious on BlueScope's recent rally, questioning whether the steelmaker's gains can be sustained amid an economic slowdown. BlueScope shares have rallied on recent strength in U.S. steel prices. "Our commodity strategy team expects momentum to fade," the analysts say of U.S. steel-price gains. "We are also cautious about high-value product volumes in Australia in a slowing residential construction market," they say in a note. The analysts raise their target on the stock to A$19.00 from A$18.20 but keep a neutral rating. BlueScope is up 0.1% this session at A$20.59. It has gained nearly 10% since the start of November. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

(END) Dow Jones Newswires

November 22, 2023 23:01 ET (04:01 GMT)