0303 GMT - Qantas's aim of lifting annual underlying Ebit from its frequent flyer program to A$800 million-A$1 billion by FY 2030 still looks optimistic to Jarden analysts. They acknowledge the carrier's ambition to improve brand loyalty and membership through its changes to the loyalty program, but tell clients in a note that they forecast FY 2030 underlying Ebit of about A$600 million. This includes Qantas hitting its 20% Ebit margin target for the unit. Still, Jarden keeps its buy rating and A$7.00 target price on the stock. Shares are up 1.8% at A$5.79. (stuart.condie@wsj.com)

0056 GMT - Qantas's changes to its frequent-flyer program should make it more attractive to third-party purchasers, Macquarie analysts write in a note. They say that improving the availability of so-called reward flights should address customers' perception that it is impossible to redeem accrued points. This in turn will make the program more valuable to partners, they add. Macquarie makes no changes to its earnings forecasts, noting that Qantas's guidance reflects the belief that extra revenue should offset costs. Macquarie keeps an outperform rating and A$6.00 target price on the stock, which is up 1.6% at A$5.78. (stuart.condie@wsj.com)

0053 GMT - Woodside and other energy companies operating in Senegal ultimately may not face much blowback from the African country's new president's push for an audit of the oil and gas sector, says Jarden. Woodside is in the final stages of completing the first phase of its Sangomar oil development in Senegal, so the review does pose a risk to potential economics and cash flows. Still, analyst Nik Burns says that "any changes proposed to current fiscal arrangements will most likely be minimal to avoid dissuading future sector investment." Jarden retains a neutral call on Woodside and A$29.00/share price target. Woodside is up 0.9% at A$30.38. (david.winning@wsj.com; @dwinningWSJ)

0045 GMT - Ansell's acquisition of Kimberly-Clark's PPE business is not without risk, especially given it comes amid the Australian company's ongoing productivity initiatives, Morgans analyst Derek Jellinek says. He tells clients in a note that the acquisition's valuation multiple looks reasonable and that the strategic rationale is sound. Yet he sees risk in the integration process, with Ansell also coming off an organizational redesign. Morgans lifts its target price 14% to A$25.61 and keeps a hold rating on the stock, which is up 6.6% to A$25.46. (stuart.condie@wsj.com)

0038 GMT - Citi turns bullish on rural-services company Elders despite Monday's profit warning. In a note, analyst William Park lowers a forecast for FY 2024 underlying EBIT by 26% to A$130 million, putting it at the midpoint of Elders's new guidance range of A$120 million-A$140 million. "However, given earnings are now rebased with improving outlook in the near term, we think ascribing higher valuation multiples is appropriate at this juncture," says Citi, moving to buy from neutral. (david.winning@wsj.com; @dwinningWSJ)

0033 GMT - Suncorp and IAG may see margins expand into FY 2025 as a result of premium growth, say Morgan Stanley analysts in a note. This is because price increases take almost a year to earn, while inflation and reinsurance costs are slowing, MS says. The bank's March new business survey shows premium growth is robust but slowing. Motor insurance, up 21% year-over-year in March and home insurance, up 18% are at a lower growth when compared with December 2023, the investment bank says. MS reckons that the around 20% price increases in its March survey may not translate into gross written premium growth at the same levels given customers' inclination to save or shop around for better deals. (alice.uribe@wsj.com)

0030 GMT - Ansell could apply lessons to the rest of its business from the higher-margin PPE business it is acquiring from Kimberly-Clark, Jefferies analysts Vanessa Thomson and David Stanton say. Raising their recommendation on the stock to buy from hold, the pair write in a note to clients that the acquisition looks highly complementary to the Australian company's existing product portfolio in a market that is growing in the mid-to-high single digits. They raise their FY 2026 revenue and EPS forecasts by 17% and 4.5%, respectively. Jefferies lifts target price 19% to A$30.85. Shares are up 7.5% at A$25.69. (stuart.condie@wsj.com)

0020 GMT - Ansell's acquisition of Kimberly-Clark's PPE business helps turn Macquarie bullish on the Australia-listed stock for the first time in 18 months. Macquarie's analysts tell clients in a note that they see 7% FY 2027 EPS accretion from the US$640 million acquisition. They see the deal as strategically reasonable for Ansell, providing the protective garment maker with an improved earnings profile, geographic diversification, and new end markets including in electronics. Macquarie lifts target price 14% to A$28.15 on factors including improved EPS forecasts. It raises its recommendation to outperform from neutral. Shares are up 8.1% at A$25.83. (stuart.condie@wsj.com)

0003 GMT - Muted interest rate cut expectations have likely deferred a potential re-rating for Australian non-bank lenders, say Citi analysts in a note. This is partly because such lenders historically correlate strongly with rates, the investment bank says. As a result, Citi is neutral on the sector but reckons that if funding spreads continue to compress, this could present an upside risk. Citi now has a sell call on Australian Finance Group as it faces difficult reinvestment and a buy call on Liberty Group given its good growth prospects and as its shares have underperformed. (alice.uribe@wsj.com)

2316 GMT - U.S. investment firm K1's takeover offer for Qoria worth A$0.40/share looks too low to Shaw & Partners based on other recent deals in the tech sector. In a note, analyst Jules Cooper highlights that the initial premiums offered by bidders for Nitro Software, Elmo and Whispir averaged 67%, rising to 93% when the deals were completed. K1's proposed 27% premium to acquire Qoria looks low, given that the company is also approaching a cash profit inflection point, Shaw & Partners says. Qoria said on Monday that it rejected K1's proposal. Shaw raises its target price for Qoria by 30% to A$0.52/share to reflect the potential for a change of control. (david.winning@wsj.com; @dwinningWSJ)

2314 GMT -- Bank of Queensland's upcoming 1H FY 2024 is likely to be tough, with how its transformation program is progressing in focus for investors, say Goldman Sachs analysts Andrew Lyons and John Li in a note. GS forecasts 1H expense growth of 3% half-on-half, but notes there is still a high level of risk around BOQ's transformation plans. Banks, GS says, have historically struggled to stay on budget when undergoing large-scale transformation programs. On 1H net interest margin, GS forecasts it to fall another 6 basis points half-on-half to 1.52%. GS forecasts 1H cash earnings to fall 40% to A$152 million compared to the same time in the previous year compared to Visible Alpha consensus of A$164 million. (alice.uribe@wsj.com)

2255 GMT -- Jefferies was more concerned than most investors about the headwinds facing Elders, but it was surprised by the magnitude of the rural-services company's earnings downgrade on Monday. Elders now expects FY 2024 underlying Ebit of A$120 million-A$140 million, citing issues including lower crop protection prices and weak cattle and sheep prices. That was 26% below Jefferies's forecast at the midpoint, and 30% short of consensus expectations. "We've downgraded FY 2024 in line with guidance but still assume for FY 2025-2026 that livestock pricing continues to recover and agchem channels are cleared leading to improving agchem margins," analyst John Campbell says. "Our core view continues to be, if you want to invest in ag through the cycle, first be careful and second invest in quality, which is GrainCorp." (david.winning@wsj.com)

2255 GMT - The earnings outlook for Australian general insurers IAG and Suncorp is positive, according to Morningstar's Australia and New Zealand Equity Market Outlook for 2Q 2024. Insurers are seeing higher claims matched with higher premium rates, while an uptick in cash rates lifts investment income on policyholder and shareholder funds, Morningstar says. It reckons investment income is likely to peak in FY 2024, but should remain well above the lows endured when interest rates were near zero. Still, Morningstar prefers insurance brokers Steadfast, AUB and PSC Insurance over the insurers. This is because brokers can ride industry tailwinds without taking on the underwriting risk. (alice.uribe@wsj.com)

2249 GMT - Beach Energy's 15% share-price drop Monday on another forecast rise in capex for its Waitsia Stage 2 natural-gas project looks too steep to investment bank Wilsons. Beach now expects first gas from Waitsia Stage 2 in early 2025, later than the mid-2024 schedule outlined before. It also estimated its share of capex at A$600 million-A$650 million, up from A$450 million-A$500 million that was already higher than originally budgeted. In a note, analyst James Karakatsanis raises a forecast for capex to A$140 million and pencils in an April 2025 start date for Waitsia Stage 2.(david.winning@wsj.com; @dwinningWSJ)

2238 GMT - Australian banks look to have plenty of tailwinds, including falling inflation and strong immigration, but the market may be too optimistic about interest rates, according to Morningstar's Australia and New Zealand Equity Market Outlook for 2Q 2024. "If inflation rears its head again, some of the optimism could come out of share prices for banks," Morningstar says. The same goes for other recent winners, including consumer cyclicals, REITs, and tech stocks, the ratings company adds. More widely, the market has surprised on the upside, with equity investors looking to the "green pasture" of lower interest rates, Morningstar says, with it viewing that major bank gains have more than made up for slides from iron ore miners

0533 GMT - Regal Partners' most recent quarterly funds under management update looks positive and should see the market begin to focus on the potential for increased performance fee generation, says E&P analyst Olivier Coulonin. E&P adds that this comes as more Regal funds and strategies exceed their highest levels in value. Strong investment performance contributed 7%, or A$0.81 billion, of funds under management growth for the quarter ended March 31. E&P says it only assumed 3% across 1H FY 2024. Still, FUM was affected by the decision to close Hong Kong-based East Point Asset Management following a period of challenging performance and the departure of a seed investor, E&P adds. (alice.uribe@wsj.com)

(END) Dow Jones Newswires

April 09, 2024 01:00 ET (05:00 GMT)