0353 GMT - Any meaningful recovery in Perpetual's investment flows, even with strategies in place to improve them, seems to be some time away, say Citi analysts in a note. The Australian investment manager reported 2Q FY 2024 outflows of A$4.3 billion, with Citi saying it's "disappointing" that Barrow Hanley is the only one of Perpetual's boutiques to attract net inflows over 2Q. "We do not foresee any quick fix to this as likely even if, as is possible but debatable, Perpetual is doing the right thing for the longer term," says the investment bank, noting that the industry backdrop of lower active equity fund flows isn't helping. Citi cuts the stock's target price 4.5% to A$26.30. Perpetual falls 2.7% to A$24.97. (alice.uribe@wsj.com)

0213 GMT - Royal Philips's proposed settlement with U.S. authorities over a recall of its sleep-apnea machines looks positive for breath-tech rival ResMed, Citi analyst Mathieu Chevrier says. The terms and timeline of Philips's resumption of sales of its machines in the U.S. are still unclear. Chevrier reckons this lack of detail means that Philips is unlikely to return to the device market before Citi's previous assumption of July 1, 2024. Citi forecasts ResMed could achieve 4% average annual growth in Americas device sales through fiscal 2026. Citi has a buy rating and target price of A$34.00 on ResMed's Australia-listed securities. Shares are up 1.4% at A$28.84. (stuart.condie@wsj.com)

0152 GMT - The changing leadership at Singapore Telecommunications-owned Optus raises the risk of elevated competition in the Australian mobile market, Goldman Sachs analysts tell clients in a note. The 2023 network outage that led to the departure of Optus CEO Kelly Bayer Rosmarin has created uncertainty over whether the Singtel-owned business might take a more aggressive approach to market share, the GS analysts say. They point out that the outage may have created opportunities for rivals Telstra and TPG to increase their market share, including by bolstering the perception of Telstra's relative network quality. Optus's new chief operating officer cut staff and made cost savings in his previous role as StarHub CEO, they add. (stuart.condie@wsj.com)

0126 GMT - City Chic Collective needs to rapidly turn around its sales to meet market expectations for its full fiscal year, cautions Citi analyst Sam Teeger. While the rate of annual sales decline eased slightly in 2Q relative to 1Q, the plus-size clothing retailer's 1H sales of A$105.8 million are still 29% lower on the year, he notes. The average analyst forecast is for full-year sales of A$218.4 million, according to data compiled by FactSet. Teeger is also concerned that City Chic had less net cash at the end of 1H than expected. Citi has a last-published A$0.44 target price and buy/high risk rating on the stock, which is up 20% at A$0.52. (stuart.condie@wsj.com)

0031 GMT - Bapcor's latest trading update showed predictable weakness in the autoparts company's retail division but also increased visibility of its core earnings base, Morgans analyst Scott Murdoch writes in a note. He tells clients that the 13%-15% fall in 1H group net profit was larger than he had anticipated, but that the overall trading update and 13% fall in retail earnings were broadly in-line with his expectations. He sees risk that Bapcor's transformation project will fail to yield savings forecast by the company, and worries about the recent departure of the CFO, but believes that Bapcor is positioned to grow earnings in fiscal 2025. Morgans trims target price 5% to A$6.60 and upgrades its rating to add from hold. Shares are down 0.5% at A$5.55. (stuart.condie@wsj.com)

0019 GMT - Origin Energy's dividend policy will be the main point of interest for Macquarie analysts when the Australian energy generator and retailer reports its 1H results. They tell clients in a note that there is a chance that Origin could raise its payout ratio from 30%-50% of free cash flow to as high as 50%-75%. Origin may declare a materially higher dividend across the whole of its 2024 fiscal year, they say. This could exceed the average analyst forecast of A$0.43/share, they add. Origin paid out A$0.365/share across fiscal 2023. Macquarie has an outperform rating and A$9.26 target price on the stock, which is down 0.4% at A$8.285. (stuart.condie@wsj.com)

1834 ET - Lundin Mining says 4Q revenue will be hurt by lower prices for molybdenum and nickel. "Downward provisional pricing adjustments on concentrate sales completed in prior quarters is expected to reduce revenue in the fourth quarter by approximately $5/lb for molybdenum and approximately $1/lb for nickel." Analysts have projected prices of nickel and other battery metals will remain low this year due to oversupply. Earlier this month, BHP said that "At Nickel West, we are evaluating options to mitigate the impacts of the sharp fall in nickel prices." It said "the nickel industry is undergoing a number of structural changes and is at a cyclical low in realised pricing." (josh.beckerman@wsj.com)

2243 GMT - More than A$500 million has been wiped off Gold Road's valuation over the past month due to production setbacks, which Ord Minnett considers to be overdone. In a note, analyst Paul Kaner says contractor issues could linger near term, and there remains a risk that confidence in Gold Road's operational understanding could be dented once more. But a 30% stock drop in a month looks too steep, given issues such as labor availability can be overcome, the bank says. "Gold Road still retains its high margin, long mine life appeal (+10 years) for those looking for a leveraged small-cap gold exposure," Ord Minnett says. (david.winning@wsj.com; @dwinningWSJ)

2225 GMT - Bapcor's 1H earnings guidance disappoints Ord Minnett, especially as rivals in the auto parts retail and wholesale sector appear to be getting stronger. Bapcor yesterday signaled a 13%-15% drop in 1H net profit to A$53 million-A$54 million, missing Ord Minnett's expectations by some 5%. In a note, analyst James Casey said the profit drop reflects lower-than-expected sales and cost inflation in 1H. "Bapcor's sales performance across its Burson Trade business, Specialty Wholesale and Retail operations are all underperforming the results from its peers," Ord Minnett says. "If this were to persist over a longer period it could give rise to pressure on operating margins." The bank trims its FY 2024 and FY 2025 earnings forecasts by 5.8% and 4.4%, respectively. It retains a hold call on the stock. (david.winning@wsj.com; @dwinningWSJ)

1715 GMT - IGO's downgrade of an annual production estimate for the lithium business it owns in a joint venture with China's Tianqi Lithium is logical and demonstrates a rational response to the soft lithium market conditions, Jefferies says. IGO now expects FY 2024 spodumene-concentrate output from the Greenbushes operation of 1.3 million-1.4 million tons, down from prior guidance for 1.4 million-1.5 million tons. IGO also restructured a pricing mechanism for Greenbushes offtake, moving it closer to spot pricing. In a note, analyst Mitch Ryan says resolution on the pricing mechanism means the focus can shift to a pending update on the IGO's nickel business. Jefferies retains a hold call on IGO's stock. (david.winning@wsj.com; @dwinningWSJ)

2136 GMT - Netwealth's 2Q FY 2024 update showed a recovery from weak funds under administration growth in the previous quarter, Jefferies analysts Simon Fitzgerald and William Richardson say in a note. The first quarter of FY 2024 was the weakest quarter-on-quarter growth rate since 4Q FY 2022, so the 2Q FY 2024 resulted was a reversal, Jefferies says. Still 2Q FY 2024 net inflows are 4% below the 12-quarter average of A$2.7 billion, they add. At the same time, Jefferies says gross custodial outflows of A$2.3 billion remain elevated, Jefferies says while maintaining its hold rating. (alice.uribe@wsj.com)

2132 GMT - Woolworths's earnings have largely held up so far despite a worsening performance by its New Zealand food business and weakness at Big W, but things are likely to get tougher from here, Jefferies says. "Food inflation is slowing but cost-of-doing-business growth remains high," analyst Michael Simotas says in a note. Another headwind is the recently announced inquiry into supermarket pricing in Australia. "While regulatory implications are unlikely, associated political pressure and media attention may influence pricing decisions and adversely impact margins," Jefferies says. The bank retains a hold call and A$38.00/share price target. Woolworths ended Monday at A$36.19. (david.winning@wsj.com; @dwinningWSJ)

2126 GMT - A sharp sell-off of Gold Road Resources shares on weak annual output and cost guidance should be seen as a buying opportunity for investors, Jefferies says. That's because the issues facing the miner are likely temporary in nature, analyst Mitch Ryan says in a note. "Ongoing labor availability, specifically for drill and blast has negatively impacted the outlook for 2024," Jefferies says. "Labor pressures appear to be alleviating throughout Western Australia as nickel and alumina operations are curtailed, which may help address this." Jefferies trims its price target by 4.8% to A$2.00/share. Gold Road fell 18% yesterday to close at A$1.395, an around 10-month low. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

January 29, 2024 23:04 ET (04:04 GMT)