0013 GMT - Endeavour Group's relatively long-term earnings targets for its pubs don't shift Morgan Stanley analyst Melinda K. Baxter's bearish stance on the stock. She writes in a note to clients that, while the market is likely to look favorably on Endeavour's aim to increase pubs EBIT by A$150 million by fiscal 2028, structural challenges from declining sales volumes and gambling regulation keep her underweight on the stock. MS has a A$5.60 target price on the stock, which is down 0.6% at A$5.17. (stuart.condie@wsj.com)

2348 GMT - Xero's latest price increase suggests the accounting software provider has confidence in the value offered by its product's so-called partner edition, Citi analyst Siraj Ahmed says. He also likes the partner-edition price rise for the 2% lift it promises to Australian average revenue per user in fiscal 2025, when Xero will also benefit from at least one increase to its business-edition prices. The partner-edition pricing move suggests to Ahmed that Xero now has an annual rhythm to hikes. He tells clients in a note that he anticipates price hikes in Xero's other markets. Citi has a buy rating and A$129.40 target price on the stock, which is down 0.7% at A$102.97. (stuart.condie@wsj.com)

2347 GMT - The market is challenged in making forecasts for Macquarie's commodity revenue growth, which is increasingly becoming an important earnings contributor, says UBS analyst John Storey in a note. "The commodity business alone has grown five times since FY 2016 and, as at 1H FY 2024, Commodities and Global Markets contributed 48% to the group's pretax profits," notes UBS. The investment bank has developed a multifactor model to better understand the drivers behind, and correlations between, the division's earnings and broader commodity markets. From this, UBS drops its views on CGM's bottom line profits by 6%, 12% and 12% respectively over FY 2024-2026. It downgrades the stock to neutral from buy, and cuts its target 2.7% to A$180.00. Macquarie falls 1.9% to A$167.61. (alice.uribe@wsj.com)

2335 GMT - Zip Co.'s accelerating U.S. revenue growth drives Citi analyst Siraj Ahmed to raise his earnings forecasts for the Australian buy-now-pay-later operator, although he points out that there are still balance-sheet issues to be resolved. Ahmed tells clients in a note that driving U.S. growth while keeping local loss rates low was the highlight of Zip's most recent trading update. He now anticipates A$17 million cash earnings for FY 2024, compared with an average analyst forecast of A$5 million. Less positively, Zip needs to renew a corporate debt facility due to expire in March 2024 and still faces A$100 million of outstanding convertible notes. Citi raises the stock's target price 11% to A$0.51 and stays neutral. Shares up 7.1% at A$0.45. (stuart.condie@wsj.com)

2333 GMT - Australian asset manager Perpetual may be undervalued by the market, Morgan Stanley analysts say in a note. For the current share price, Morgan Stanley says if it assumes the company's Private Wealth unit is on 13 times FY 2025 price to earnings and the Corporate Trust unit is on 17 times, the asset manager is on 5-6 times price to earnings. Perpetual yesterday announced a strategic review of its Corporate Trust and Private Wealth divisions, which implies the Asset Management business could be separated from these divisions. "We think the review could unlock upside for the stock," the analysts say. Perpetual is currently up 7.7% to A$25.59. (alice.uribe@wsj.com)

2322 GMT - The likelihood of regional lender Bank of Queensland cutting its dividend is rising, say Morgan Stanley analysts in a note. The investment bank currently forecasts BOQ to maintain its dividend, but still sees the potential for a cut. "Based on our earnings estimates, a 60-65% payout ratio would imply an FY 2024 dividend of 29- 31 Australian cents versus FY 2023 (41 Australian cents)," Morgan Stanley says. The earnings outlook provided by BOQ at its AGM is broadly consistent with previous commentary, analysts say. The investment bank forecasts forFY 2024 an around 16 basis point year on year margin decline, an around 7% fall in revenue, around 5% expense growth, a 28% earnings decline, and 5% return on equity. (alice.uribe@wsj.com)

2239 GMT - Washington H. Soul Pattinson's bid for Perpetual is not certain to lead to anything, but it has the potential to flush out other bidders, Citi analysts say in a note. To reflect this, Citi introduces a small around 5% premium, versus the prior 10% discount, to its Perpetual valuation. This lifts its target price 16% to A$25.65, with this equivalent to a 5% discount to the rejected bid price. WHSP's bid came just a few hours after Perpetual suggested that it was exploring the possibility of separating its Corporate Trust and Wealth Management businesses. "Not surprisingly, Perpetual sees the proposal as undervaluing the business and has rejected it," says Citi which keeps its neutral rating. Perpetual was last up 6.3% to A$23.76. (alice.uribe@wsj.com)

0541 GMT - Perpetual's corporate trust and wealth-management businesses could be worth between A$1.7 billion and A$2.2 billion if they are spun off following the Australian wealth manager's strategic review, J.P. Morgan analyst Siddharth Parameswaran says. He reckons that both businesses could be valued at between 15X and 20X earnings, which would be a higher multiple than the rump asset-management business with which Perpetual would be left. Parameswaran tells clients in a note that corporate trust and wealth management are quality businesses, with good growth records and scale. A partial sale would be among Perpetual's options if it receives the right offer, he adds. JPM has an overweight rating and A$26.00 target price on the stock, which closed 6.3% higher at A$23.76. (stuart.condie@wsj.com)

(END) Dow Jones Newswires

December 06, 2023 22:57 ET (03:57 GMT)