0355 GMT - Tyro's strong cost control and improved pricing help secure the Australian payments-terminal provider a new bull at Wilsons. Tyro's 1H result has provided Wilsons' analysts with the comfort they needed on near-term earnings to become more positive on the stock. They acknowledge Tyro's lowered annual guidance for total transaction value, but believe that management is doing a good job in the face of softer underlying consumer spending and heightened competition. They like Tyro's reduced headcount and reinvestment in marketing. 1H revenue and gross profit were in line with their forecasts. Wilsons raises target price 21% to A$1.30 and lifts its rating to overweight from market-weight. Shares are down 4.2% to A$1.035. (stuart.condie@wsj.com)

0245 GMT - PolyNovo secures a new bull at Wilsons, where analysts say the skin-healing tech developer's expansion outside the U.S. is progressing better than they had expected. They observe that markets outside of the world's largest economy account for more than 25% of PolyNovo's revenue, which they say is an achievement beyond most of its medical-tech counterparts. They acknowledge prior misgivings about PolyNovo's elevated valuation--which they articulated as recently as last month--but reckon that the company has now sufficiently demonstrated that it deserves a premium. Wilsons raises its target price 36% to A$2.44 and upgrades its recommendation to overweight from market-weight. Shares are up 8.6% at A$2.155. (stuart.condie@wsj.com)

0220 GMT - The strength of Pacific Smilies' first-half resultsmay push the dentistry chain's shareholders to hold out for a better takeover offer, Wilsons analysts say in a note. The company has generated its highest-quality results in three years and shareholders may press to extract more than the A$1.40-a-share proposed by Genesis Capital, they tell clients. The analysts say Pacific Smiles' decision to pause its expansion program has given the market additional clarity on the consistent growth across its older practices. They raise their target price for the stock by 59% to A$1.40 and lift their recommendation to market-weight from underweight. Shares are up 1.8% at A$1.42. (stuart.condie@wsj.com)

0103 GMT - Appen remains exposed to the risk that its global services revenue could further decline following Google's exit as a customer, Jefferies analyst Wei Sim writes in a note. Sim reckons that the outlook for the data-annotation provider's global services revenue has stabilized, once Google's exit is stripped out, but worries about the chances of other customers cutting or canceling work. More positively, he writes that Appen's cost-reduction plan is on track and likes the positive momentum shown in China. Jefferies raises its target price 61% to A$0.45 and keeps a hold rating on the stock, which is up 18% at A$0.62. (stuart.condie@wsj.com)

0057 GMT - Zip's exposure to external factors including funding costs and lending fees leaves Jefferies analyst Roger Samuel wanting further margin expansion before turning more positive on the stock. Samuel tells clients in a note that the buy-now-pay-later operator's 1H result highlights profitability's sensitivity to changes beyond its control. He also points to the potential impact of loss rates stemming from users' operating against a tough consumer backdrop. He says that Zip has little margin for error. He lifts target price to A$0.87 from A$0.38 but keeps a hold rating on the stock, which is up 5.6% at A$0.845. (stuart.condie@wsj.com)

0026 GMT - Cooper Energy may be close to putting problems at its Orbost gas-processing plant in southeastern Australia in the rear-view mirror, Barrenjoey says. Cooper achieved record average production of 62.8 terajoules/day for a 12-day period this month. And in a note, analyst Dale Koenders says the asset appears to be repeatedly achieving 64TJ/d now. He also highlights that in-situ cleaning trials, completed earlier this month, were successful and are likely to be converted to a permanent solution. "We think this could finally signal the end of the Orbost operation improvement program which has proven to be an overhang on the stock, although aspirations of 67-70TJ/d are yet to be achieved," says Barrenjoey. (david.winning@wsj.com; @dwinningWSJ)

0021 GMT - Barrenjoey puts pathology-services provider Healius's gearing under the microscope following its 1H result. Barrenjoey now forecasts Ebitda of A$345.1 million in FY 2024, representing a 2% cut to its prior forecast, with closing net debt of A$1.53 billion. On that basis, Healius will have a leverage ratio of 3.6% at the end of FY 2024. While that would keep Healius within its loan covenants, Barrenjoey says that's contingent on a significant drop in net debt in FY 2024 versus a year ago. In a note, analyst Saul Hadassin says Healius's pathology division "needs to deliver a material step-up in profitability in 2H to ensure covenants are not breached." (david.winning@wsj.com; @dwinningWSJ)

0014 GMT - Alcoa's $2.2 billion takeover offer for Alumina could be timely, says Barrenjoey. Newly provided 2024 spending guidance means Alumina is free cash flow negative at spot commodity prices, analyst Glyn Lawcock says in a note. He estimates Alumina's all-in cash breakeven price at $372/ton, above the current alumina price of $364/ton. "While Alumina has $200 million of liquidity, perhaps the Alcoa offer (if approved and accepted), could end up being the lifeline Alumina needs," Barrenjoey says. (david.winning@wsj.com; @dwinningWSJ)

0005 GMT - Altium shares are likely to reflect the likelihood of the company being taken over than the Australian software provider's fundamentals, Morgan Stanley analysts write in a note. With Altium's board having recommended Renesas's A$68.50/share takeover offer, MS sees the probability of regulatory approval, counter proposals and deal completion driving valuation for the foreseeable future. Altium's 1H revenue, earnings and net profit all fell short of MS's forecasts, but its analysts note that performance is unlikely to derail the takeover by Renesas. MS raises target price 37% to A$68.50 and cuts its recommendation to equal-weight from overweight. Shares are up 0.5% at A$65.36. (stuart.condie@wsj.com)

0002 GMT - Worley's low leverage at the end of December has caught Citi's eye. Worley's leverage of 1.8X was down from 2.4X a year earlier, and the engineering company said this signaled a prudent use of cash flow to reduce risk, boost liquidity and ensure it has enough capacity to fund its growth ambitions. Still, leverage of 1.8X is below the company's target range of 2.0X-2.5X. In a note, Citi analyst James Byrne said the current level of leverage "may facilitate payout ratio growth in future periods." Worley declared an interim dividend of A$0.25/share, in line with a year ago. (david.winning@wsj.com; @dwinningWSJ)

2351 GMT - Perpetual's 1H FY 2024 result disappoints Citi analysts, who note that while the miss to their forecasts is relatively small at 2%, the result seems to have been supported by a provision release. The result is better than expected, they say in a note, but add that a lower profit before tax margin from Asset Management implies lower quality. Citi says the absence of an update on the ongoing strategic review is disappointing. "As we have previously written, the process will need to resolve the tax issues surrounding any outright disposal of Corporate Trust," says Citi. Perpetual is down 3.2% to A$24.14. (alice.uribe@wsj.com)

2342 GMT - Perpetuals' 1H FY 2024 result contains an overall profit miss, and the fact that there is no firm update on the company's strategic review will likely disappoint, say UBS analysts Shreyas Patel and Scott Russell in a note. The investment bank says underlying net profit after tax for the 1H was 4%-5% below UBS and consensus estimates, with this being driven by weaker asset management and corporate trust units. UBS says that 1Hachieved synergies of A$23.5 million were better than UBS estimates of A$19.3 million though the operating expenditure miss suggests underlying cost growth is running high. This, UBS reckons, which seems at odds with group expense guidance maintained at the upper-end of 27%-31% growth for FY 2024. Perpetual falls 3.5% to A$24.06. (alice.uribe@wsj.com)

2339 GMT - Altium's disappointing 1H result and ongoing dispute with Australian tax authorities are unlikely to derail the software developer's takeover by Renesas, Jefferies analyst Roger Samuel says. Samuel explains that underlying Ebitda fell about 11% short of the average analyst forecast, but still rose 3% on a year earlier. This is also well short of the 25% fall that would represent a material adverse event under the terms of Altium's takeover agreement. Besides, resolution of the tax dispute is not a condition of the takeover and Altium has sufficient cash on its balance sheet for any likely settlement, he adds. Jefferies has a hold rating and A$68.50 target price on the stock, which is flat at A$65.35. (stuart.condie@wsj.com)

1833 ET - Claims remain highly supportive for Helia, but Macquarie analysts reckon that conditions are likely to normalize over the next few years. They add that for the full year strong home prices have resulted in customers who were struggling with repayments to sell, resulting in reserve releases for Helia. The company is involved in the business of insuring high loan-to-value loans for its lending customers, "We expect credit quality to normalize, as potential risks around unemployment and house prices emerge," Macquarie says. It keeps its neutral call. (alice.uribe@wsj.com)

2330 GMT - The share-price dive that greeted Zip's 1H results suggests many investors may have expected more potential upside to the buy-now-pay-later provider's near-term earnings, Ord Minnett analyst Phillip Chippindale says. Zip reported core cash earnings that were slightly better than Chippindale had forecast. It also flagged strong momentum into fiscal 2H, but a 14% drop in the company's shares hints that the market wanted more, Chippindale writes in a note to clients. Nonetheless, he keeps a buy rating on the stock and lifts target price 14% to A$1.08. Shares are up 3.1% at A$0.825. (stuart.condie@wsj.com)

1123 GMT - Analysts aren't impressed by Flight Centre's 1H result despite a surge in profits. Jefferies analysts Michael Simotas and Naveed Fazal Bawa call the result a substantial miss on a comparable basis, noting the company has changed how it accounts for amortization of convertible notes and losses tied to shuttered U.S. business unit GoGo. RBC Capital Markets analyst Wei-Weng Chen also sees the result as slightly weaker than expected. However, Chen says there are some positive lead indicators, including increasing airline capacity, falling airfares, which should stimulate demand, and the potential for corporate travel to continue its post-Covid recovery. Flight Centre shares were down 7% in recent trade to A$20.20. (mike.cherney@wsj.com; @Mike_Cherney)

2318 ET - Helia's recent run of negative incurred claims costs represents an unusual situation, say Jefferies analysts Simon Fitzgerald and William Richardson say in a note. The company, which is involved in the business of insuring high loan-to-value loans for its lending customers, has posted negative incurred claims cost for the last three years in a row, including in its full-year released Tuesday. Jefferies reckons elevated property prices and low unemployment have played a part in the Helia's negative incurred claims costs, it also points out that lenders are also modifying loan terms to assist borrowers in hardship. "In our view, this won't be a permanent feature of the mortgage market," Jefferies says. It keeps its underperform rating on the stock. Shares last closed down 1.1% at A$4.63.(alice.uribe@wsj.com)

2132 GMT - A move by Australian mortgage lenders to self-insure may come at the expense of Helia's future revenue growth, Goldman Sachs analysts Andrew Lyons and John Li say in a note. In a review of the Australian lenders mortgage insurance company's FY 2023 results issued on Tuesday, GS notes Helia management's expectation that its largest client, Commonwealth Bank, will continue to reduce the proportion of its high loan-value-ratio loans that it insures with Helia from 60% in FY 2023 toward the lower end of the 50% to 70% contractual range. GS downgrades Helia to neutral from buy, largely due to valuation the investment bank says. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

February 27, 2024 23:00 ET (04:00 GMT)