0057 GMT - If Evolution Mining targets more deals then they would need to be done mostly from equity, UBS says. Evolution raised A$525 million via issuance of new shares to fund the purchase of an 80% stake in the Northparkes copper and gold mine in Australia. In a note, analyst Levi Spry highlights that more operations could be coming to the market, such as Newmont seeking to sell assets in Canada. UBS says the deal for Northparkes, another caving operation, means Evolution's capex profile may exceed market expectations. "Staging these with those at Ernest Henry and other mines will be important as Evolution begins to de-gear," UBS says. "We estimate A$700 million/year total capex over the next few years (versus A$600 million/year consensus) to support growth across the portfolio." (david.winning@wsj.com; @dwinningWSJ)

2330 GMT - A 1H FY 2024 update at Temple & Webster's AGM suggests that the Australian online retailer is back on track to achieve its target of A$1 billion in revenue by FY 2026-28, say Morgan Stanley analysts in a note. The investment bank now forecasts Temple to hit its revenue target by FY 2028, previously MS had this as FY 2029. In the near future, MS expects Temple to continue taking share, as it benefits from a shift to lower price points to attract value conscious customers. "We continue to see margin improvement over time from scale benefits and think reinvesting during cyclical weakness makes strategic sense. Net cash position provides optionality," says MS. It keeps its overweight call, and raises its target price 32% to A$9.25.Temple was last down 0.2% to A$8.38. (alice.uribe@wsj.com)

2302 GMT - Sigma's planned A$8.8 billion combination with Chemist Warehouse Group could prompt some independent pharmacies to switch wholesalers at the end of their contracts, Jefferies analyst David Stanton says in a note. He thinks most pharmacies use two wholesalers, and rely on one more. "Should this deal complete, we believe there is the potential for loss of independent pharmacists in the medium term who use Sigma as a wholesaler, as these pharmacists may not wish to use a combined entity that is a potential retail threat to their business," Jefferies says. (david.winning@wsj.com; @dwinningWSJ)

2300 GMT - Costa's latest profit warning illustrates the challenges of horticulture and why it arguably better resides in the private sphere, Jefferies says. "As an industry, it can produce reasonable through-the-cycle return on capital employed but year to year, returns can be very volatile," Jefferies analyst John Campbell says in a note. Costa, which has agreed to a takeover by Paine Schwartz Partners, yesterday said earnings for this year will likely be below 2022, citing trading since August and its outlook for the remaining few weeks. Despite this downbeat view, Jefferies thinks the takeover by PSP will happen as key conditions for pulling the bid haven't been met. (david.winning@wsj.com; @dwinningWSJ)

2255 GMT - There was good news from Smartgroup yesterday beyond its big contract win with the South Australian government to provide salary packaging and novated leasing services, Citi says. "While the contract win was substantial, we view the trading update and Smartgroup's comments around investing for future demand as the key takeaway, as it signals Smartgroup is expecting significant growth ahead in novated volumes," analyst Jack Dunn says in a note. Citi expects volume growth and benefits from recent staffing investment to lift Ebitda margins by 230 basis points over FY 2024-2025, and margins could then expand again once technology investments are deployed. (david.winning@wsj.com; @dwinningWSJ)

2247 GMT - Fruit-and-vegetable marketer Costa's latest signal of weak trading isn't ideal as it tries to close its acquisition by Paine Schwartz Partners, but Macquarie thinks the offer will proceed as planned. "We believe the deal is well enough advanced and PSP should have a through the cycle view on Costa and hence look through short term seasonal issues," Macquarie says in a note. Costa now thinks earnings for this year will be below 2022, citing trading since August and its outlook for the remaining few weeks. It said bad weather had hurt the citrus category, which includes the 2023 Queensland table grape crop, while significant industry volumes in its berry and tomato categories are impacting pricing. (david.winning@wsj.com; @dwinningWSJ)

2233 GMT - For QBE to re-rate it needs to deliver stable earnings growth and remediate the North America book, say Morgan Stanley analysts in a note. The general insurer is starting to show the benefits of its reducing property exposure with FY 2023 catastrophe costs running US$100-$150 million below budget, while slowing claims inflation in global markets should provide some margin support, Morgan Stanley says. Still, falling investment yields are a near-term headwindfor QBE, as is moderating pricing. Morgan Stanleyexpects QBE's gross written premium to slow around 5% in FY 2024, partly because of slower crop growth. This prompts the investment bank to think that QBE's path to re-rating will be tough, with analysts forecasting an around 93% FY 2024 combined operating ratio. This likely means little near-term upside risk to consensus. (alice.uribe@wsj.com)

2229 GMT - WiseTech Global is set for continued revenue growth and margin improvement, but the logistics software group's stock looks fairly valued for now, says Morgans. Analyst James Filius forecasts WiseTech's revenue to grow at a compound annual rate of 21% in FY 2024-FY 2026, with Ebitda increasing at a compound rate of 29% over the same period. Morgans says it's attracted to WiseTech's market position, growth prospects via ongoing adoption of CargoWise by freight forwarders, and near-term growth opportunities across the company's customs and compliance and landside offerings. Still, it starts the company at hold with a A$73.20/share target. "With WiseTech trading on 83x FY 2024 P/E and EV/EBITDA of 47x, we believe the company is fairly valued at this time," Morgans says. WiseTech ended Monday at A$68.00. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

December 11, 2023 23:25 ET (04:25 GMT)