0048 GMT - Super Retail faces a substantial catch-up on its wage costs in FY 2025, Jefferies says. In a note, analyst Michael Simotas says Super Retail has till now been protected by its enterprise agreement, which has kept underlying wage increases in FY 2023-2024 at more normal levels despite elevated award increases. "However, our analysis of the proposed 2024 EA suggests a material wage cost catch-up (>7%) is coming in FY 2025, which could put margins under pressure," Jefferies says. "We see this as a considerable risk but maintain Hold rating given impending tax cuts and potential for monetary policy pivot." (david.winning@wsj.com; @dwinningWSJ)

0019 GMT - Raisings by metals and minerals explorers remains subdued, but it might not be long before sentiment turns once more, suggests Jefferies. Around $490 million was raised last month, down 27% year-over-year, despite a supportive pricing environment with gold at $2,125/oz and copper at $3.85/lb. "Our analysis indicates that we may not be too far away from an inflection," analyst Nicholas Rawlinson says in a note. Trailing 12-month raisings have been flattening for 11 months, and Rawlinson points out that past cycles suggest that prolonged troughs tend to last 15-25 months. "A prolonged trough is always followed by a material surge in raisings," he says. (david.winning@wsj.com; @dwinningWSJ)

2315 GMT - Healthcare-software provider Alcidion's decision to cut staff looks prudent to Bell Potter analyst Thomas Wakim. The Australia-listed company announced further cost cuts in response to persistent delays in contract tendering, and Wakim thinks this is a sensible move to avoid further shareholder dilution. He nonetheless cuts his FY 2024 forecasts in line with company guidance, and tells clients in a note that he is also lowering his FY 2025 and FY 2026 forecasts due to the contract delays. Target price falls 38% to A$0.05 and Bell Potter keeps a hold rating on the stock, which is flat at A$0.047. (stuart.condie@wsj.com)

2306 GMT - The recent pullback in Droneshield shares is enough to get Bell Potter bullish on the defense-tech company. Analyst Daniel Laing lifts his recommendation to buy from hold, pointing to the fact that Droneshield is now growing profitably. Laing writes that Droneshield gives investors exposure to investment trends including rising global defense expenditure, as evidenced by its contracts with governments in the U.S. and Australia. He is confident that Droneshield's strong financial position, detailed sales pipeline and the macro environment will allow it to grow earnings in 2024. Bell Potter keeps a A$0.90 target price on the stock, which is at A$0.615 ahead of the open. (stuart.condie@wsj.com)

2157 GMT - Xero's focus on tailoring its cloud-accounting platform for its target markets should drive growth in average-revenue-per-user, Citi analyst Siraj Ahmed says. He writes in a note to clients that Xero has more work to do to align its product with the market in the U.S., but he reckons that functionality is improving. That is key if Xero is to achieve traction in the U.S., he says. Ahmed raises his average-revenue-per-user forecast to an annual average 7% over five years, from 6% previously, on improving functionality and product bundling. Citi raises target price 23% to A$159.00 and reiterates its buy rating on the stock, which is at A$135.50 ahead of the open. (stuart.condie@wsj.com)

2150 GMT - For Jefferies real-estate analyst Sholto Maconochie, one of the takeaways from last month's reporting season in Australia is that development pipelines are being pushed back, cancelled or deferred. That's particularly the case in office where Charter Hall, Mirvac and Dexus have all taken a more cautious stance toward new projects. In a note, Maconochie says these decisions appeared to be motivated by "higher construction costs and/or tenant demand making economics not stack up." That has implications for the future, as it takes supply out of the market, he says. Jefferies has buy calls on stocks including Goodman, HomeCo Daily Needs REIT and Scentre.(david.winning@wsj.com; @dwinningWSJ)

1635 ET - Australian suppliers of building materials have become a hot M&A target this year, prompting Jefferies to ponder if more companies could be drawn into the deal spree. Seven is seeking to take full control of Boral, while Adbri has recommended an offer from CRH and the Barro Group that values its equity at A$1.4 billion. Meanwhile, CSR is urging its shareholders to accept a A$4.3 billion cash offer from France's Saint-Gobain. "Putting aside the large cap James Hardie the motivation for this M&A activity presumably aligning with a positive long term outlook for Australian construction brings Reliance Worldwide and Fletcher Building into focus," Jefferies analyst Simon Thackray says in a note. (david.winning@wsj.com; @dwinningWSJ)

0404 GMT - Global markets may still see a bumpy 2024, with volatility on track to rise and the potential of recession remaining, says QIC's fixed-income team in its 1Q quarterly outlook commentary."Our view is that markets are entering a new stage, where risks are more symmetric rather than skewed to the downside, with the changing skew being driven by conflicting signals from U.S data," says the Queensland state government-owned investment manager. It reckons that softening hiring-intentions data and subdued business surveys still suggest that a recession "cannot be ruled out." There is likely to be greater market volatility in 2024, which may present great buying opportunities, says QIC, but the fund manager says it is choosing to "keep some of its powder dry."(alice.uribe@wsj.com)

(END) Dow Jones Newswires

March 04, 2024 23:03 ET (04:03 GMT)