0030 GMT - Telstra's restructuring costs could threaten Morgan Stanley's bullish view of the stock. Analyst Andrew McLeod tells clients in a note that his positive investment thesis includes an expectation that the Australian telecommunications provider can keep lifting its dividend. As such, he warns that the A$200 million-A$250 million in one-off cash costs related to job cuts and restructuring could have a A$0.02/share impact on Telstra's dividend. MS currently forecasts a A$0.18/share payout in FY 2024, A$0.19/share in FY 2025, and A$0.20/share in FY 2026. The investment bank keeps an overweight on the stock but cuts its target price by 6.7% to A$4.20. Shares are down 3.8% at A$3.435. (stuart.condie@wsj.com)

0027 GMT - Aussie banks could deliver higher profits for FY 2025 if interest margins, and bad and doubtful debts beat consensus views, Jarden analysts Carlos Cacho and Jeff Cai say in a note. Visible Alpha consensus forecasts expect FY 2025 NIMs to fall by 1-4 basis points on year and bad debts to rise around 60%, the analysts say. But if both metrics are flat, that could translate to a rise of A$2 billion in sector cash profits, or around 7%, they say. That would provide further support for dividends and capital returns. "Across the major banks, in this scenario we would see Westpac as best-placed with potentially 8% of upside to earnings," says Jarden, which keeps a neutral stance on the sector. (alice.uribe@wsj.com)

0020 GMT - Morgans thinks Sonic Healthcare's disappointing earnings guidance for FY 2025 could end up being too low. Sonic expects FY 2025 Ebitda of A$1.70 billion-A$1.75 billion when currency swings are stripped out, which likely includes initial losses of some A$10 million on the Hertfordshire & West Essex NHS contract in the U.K. among other headwinds, according to Morgans. "Given evidence of waning inflation, ongoing cost out and multiple earnings drivers, we view FY 2025 Ebitda guidance as conservative, and look for additional insights at the full year results," analyst Derek Jellinek says in a note. (david.winning@wsj.com; @dwinningWSJ)

0016 GMT - Telstra's removal of annual inflation-linked price rises from postpaid mobile tariffs further illustrates the limited scope for increases, Jefferies analyst Roger Samuel writes in a note. Cutting his recommendation on the stock to hold from buy, Samuel observes that new customer acquisition is getting more difficult given the tough macro environment and rising competition from lower-cost brands. He says there's also the fact that major rival Optus hasn't raised its prices since July 2022 through a period of operational issues and leadership upheaval. Telstra may need to increase marketing spend, he adds. Jefferies cuts its target price 9.3% to A$4.00. Shares opened 2.2% lower at A$3.49. (stuart.condie@wsj.com)

2341 GMT - Telstra loses its bull at Macquarie amid what the investment bank's analysts see as a less positive outlook for Australian mobile markets. They tell clients in a note that the telecommunications provider's removal of annual inflation-linked price rises for its postpaid mobile tariffs was the key negative in its latest market update. They acknowledge that it gives Telstra greater flexibility, but worry that the dominant player is signaling it will no longer lead industry pricing higher. Pricing decisions are now increasingly dependent on those by rivals TPG Telecom and Optus, the analysts add. Macquarie cuts its recommendation on the stock to neutral from outperform and trims its target price 16% to A$3.70. Shares are at A$3.57 ahead of the open. (stuart.condie@wsj.com)

2335 GMT - Telstra's removal of inflation-linked annual price rises for its postpaid services leads Morgans analyst Nick Harris to worry that Australia's mobile industry could return to price-driven competition for users. Cutting his recommendation on the stock to reduce from hold, Harris tells clients in a note that he suspects Telstra's move heralds an intensification of competition. This would end a period of rational service pricing that he previously thought could last a few more years. He says that risks are now more weighted to the downside and Telstra no longer warrants its premium valuation of 20 times earnings. Morgans cuts its target price 25% to A$3.00. Shares are at A$3.57 ahead of the open. (stuart.condie@wsj.com)

2334 GMT - Sonic Healthcare's margins in its pathology business are likely to stay lower for longer, according to Citi. Sonic's management signaled in February that pathology margins could recover to pre-Covid levels within two years. In a note, analyst Mathieu Chevrier says consensus expectations were for Ebitda margins from pathology returning to pre-pandemic levels of 20%-21% by FY 2025. But that was before Tuesday's disappointing trading update. "We now forecast it could take four years (FY 2028)," Citi says.(david.winning@wsj.com; @dwinningWSJ)

2326 GMT -- Lab-testing specialist ALS's share-price rally into its annual result has cost it a bull in Jefferies. ALS's stock is up 21% since the end of February, gaining fresh ground even though its FY 2024 result was largely as expected. In a note, analyst John Campbell highlights that ALS's underlying net profit of A$316.5 million was in the middle of guidance provided to investors in March. Management signaled a resilient performance by its commodities business, despite reduced sample volumes. "Life Sciences margins are still improving on 2H23 lows, but pharma has limited this," says Jefferies, downgrading the stock to hold, from buy. ALS ended Tuesday at A$14.48, above Jefferies's A$13.20/share price target. (david.winning@wsj.com)

2324 GMT - Australia's S&P/ASX 200 is on track to open higher after the S&P 500 and Nasdaq Composite closed at fresh records. ASX futures are up by 0.3%, suggesting that the benchmark index, which is less than 50 points short of a record, should rally from Tuesday's 0.15% slip. Ahead of the open, travel agent Webjet said it was looking at separating its corporate and consumer units into standalone businesses. AUB said it acquired a 70% stake in underwriting agency Pacific Indemnity. All three major U.S. indices finished higher. The S&P 500 advanced 0.3%, the Nasdaq Composite rose 0.2%, and the Dow Jones Industrial Average gained 0.2%. (stuart.condie@wsj.com)

2319 GMT - Fundamentals for the Australian general insurance sector remain robust, say Wilsons Advisory analysts in a note. The outlook for the sector is still attractive with WA seeing that positive earnings momentum is likely to persist over the medium-term. Analysis of industry read-throughs supports WA's positive view, it says, seeing a strong repricing cycle, coupled with easing cost pressures as claims from catastrophic weather events normalize after a tough period for natural perils as benefits. "In combination, these factors will drive the continued recovery in insurer margins over the medium-term which is still not fully reflected in consensus in our view," says WA. (alice.uribe@wsj.com)

2315 GMT - Sonic Healthcare's profit guidance is a reminder that clinical lab companies are largely price takers and high levels of profit growth may be difficult in the medium term if inflationary pressures continue, Jefferies says. Sonic now expects FY 2024 Ebitda of around A$1.6 billion, and FY 2025 Ebitda of A$1.7 billion-A$1.75 billion when currency swings are stripped out. Lower-than-expected profit growth reflects inflationary pressures made worse by FX movements. "Sonic is in a tough spot," analyst David Stanton says in a note. "We acknowledge the difficulty in rapidly decreasing costs in relatively high-fixed-cost businesses like laboratory services." Jefferies has a hold call on Sonic's stock. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires