0122 GMT - Domino's Pizza Enterprises gets a new bull after acknowledging it has struggled in France and laying out plans to address the underperformance. Citi analyst Sam Teeger says excessive discounting has cheapened the brand and Domino's failed to localize its offer. Franchisee trust was eroded, he adds. Teeger thinks that Domino's agreement to allow third-party delivery via aggregator services should lead to higher volumes, and sees the prospect of the brand outperforming across a European summer that includes a major soccer tournament and the Paris Olympics. Citi raises its recommendation on the stock to buy from neutral on an unchanged A$44.50 target price. Shares are up 2.9% at A$37.58. (stuart.condie@wsj.com)

0104 GMT - Lendlease will target a mix of shovel-ready developments as well as its traditional long-dated urbanization projects following its pivot away from international construction markets, Morgan Stanley analysts say. They tell clients that the Australian developer and construction firm understands the need to restock its domestic pipeline, which they say looks rather bare. Adding ready-to-go projects should facilitate the invitation of capital partners and the recognition of profits, they say. MS has a A$7.35 target price and an equal-weight rating on the stock, which is down 2.3% at A$6.095. (stuart.condie@wsj.com)

0048 GMT - Premier Investments' Peter Alexander business has been Australia's fastest-growing retailer over the past five years, according to analysts at Morgan Stanley. They reckon that the sleepwear retailer, which Premier is considering for demerger, has grown Ebit by more than 27% annually since fiscal 2019. Its 16% average annual revenue growth over the same period is second only to ASX-listed Lovisa's 23%, they add. There has been sufficient company disclosure to conclude that a demerger could provide meaningful valuation upside, but the MS analysts would still like more information on segmental margins and likely dis-synergies. MS keeps an overweight rating on the stock and lifts its target price 3.9% to A$39.50. Shares are up 0.8% at A$29.70. (stuart.condie@wsj.com)

0042 GMT - Iluka's Eneabba rare earths refinery may enter production later than expected--in 2027, instead of 2026--with the company still to finalize additional funding to cover increased project costs, says Citi analyst Paul McTaggart. Getting the Australian government to increase its funding for the project is the immediate challenge for the company, McTaggart says. At the same time, Iluka faces headwinds from weak rare earths prices, which are being weighed by soft demand and excess supply in China, he adds. Citi has a neutral rating and A$7.80/share target on Iluka, which is up 2.4% at A$7.41/share. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0038 GMT - Lendlease's announcement of a A$500 million share buyback appears to have allayed market fears that the Australian property developer might need to raise capital, UBS analysts say. They tell clients in a note that the share-price jump following Lendlease's announcement that it will exit offshore development and construction indicates that market expectations were too low. Investors likely appreciated the tone and timeframes of this week's strategy update, they say. The UBS analysts warn that success in exiting international projects needs to be balanced with sufficient domestic scale and capability to win new projects. UBS keeps a neutral rating and A$7.10 target price on the stock, which is down 1.9% at A$6.12. (stuart.condie@wsj.com)

2334 GMT - Domino's Pizza Enterprises will likely find France's fast-food market tough for another 6-12 months while its latest initiatives gain traction, Macquarie analysts say. They are broadly positive on the Australian company's move to accommodate local nuances and cultural norms in order to improve franchisee engagement. This has already resulted in improved compliance on pricing, which should help margins and drive customer orders, they tell clients in a note. Even so, the analysts are cautious on management's chances of hitting an implied target of 7.5% annual growth in local store numbers through to FY 2033. Macquarie has an unchanged neutral rating and A$41.00 target price on the stock, which is at A$36.52 ahead of the open. (stuart.condie@wsj.com)

2309 GMT - Pro Medicus's five new contracts should underpin accelerating revenue growth into the imaging-tech provider's 2025 fiscal year, Goldman Sachs analysts tell clients in a note. They still anticipate 27% growth in fiscal 2024 revenue, but they lift their forecast for fiscal 2025 revenue growth to 32% from 30%. The GS analysts observe that the announced contract sizes contain no direct component from either AI or cardiology, which they suspect points to further potential upside over the medium term. GS raises its target price 1.5%, to A$136.00, and keeps a "buy" rating on the stock, which is at A$114.31 ahead of the open. (stuart.condie@wsj.com)

23:00 GMT - Arvida is acting more aggressively to improve its balance sheet than Macquarie was expecting, enabling investors to focus on the New Zealand-based retirement village operator's growth prospects once more. Arvida aims to cut core debt by some NZ$200 million through suspending its dividend, selling assets and finding a buyer for surplus land at Warkworth, among other initiatives. "We think a large proportion can be recognized in FY 2025 which will reduce gearing toward the midpoint of its 25-35% target, or below," Macquarie says. Arvida is also considering other ways to recognize value, including capital partnerships, restructuring or strategic alternatives. Macquarie retains an outperform call on Arvida. (david.winning@wsj.com; @dwinningWSJ)

2259 GMT - Domino's Pizza Enterprises' greater clarity on how it plans to drive European growth leave Goldman Sachs' analysts feeling more positive. They make no changes to their "neutral" rating and A$36.30 target price, but tell clients in a note that they like management's commitment to improving store unit profitability through higher average weekly unit sales. They approve of the shift in focus toward higher-quality, more sustainable growth for existing stores. The GS analysts point out that franchisee payback periods in Germany, the Netherlands and France all lag management's three-year target by some distance. Shares are at A$36.52 ahead of the open. (stuart.condie@wsj.com)

2257 GMT - The conclusion of Cooper Energy's well decommissioning program at the BMG oil field could make it a takeover target, Macquarie says. Cooper Energy expects the final cost of the BMG program toward the upper end of its prior A$240 million-A$280 million estimate. So, Macquarie thinks Cooper's net debt will peak at A$279 million at end-June, falling to A$249 million a year later. "We believe there is an elevated risk of corporate interest, now the BMG work is complete (was a significant overhang, costing more than initially expected), considering recent industry M&A," Macquarie says. "This now enhances the investment case, in our view." (david.winning@wsj.com; @dwinningWSJ)

2247 GMT - Aristocrat Leisure's Big Fish and Plarium Global units could fetch between US$910 million and US$1.18 billion if the company pursues a sale, Macquarie says. Aristocrat earlier this month said it is undertaking a strategic review of the game developers so it can focus more on markets such as online real-money gaming. "We do not rule out the high-end valuation, supported by RAID: Shadow Legends, which is a proven long-run franchise with growth optionality beyond Mobile Gaming," Macquarie says. A sale would likely boost Aristocrat's stock and returns on capital deployed should improve, the bank adds. (david.winning@wsj.com; @dwinningWSJ)

2242 GMT - Fisher & Paykel Healthcare's FY 2024 result bolsters Wilsons's confidence that the medical device maker's longer-term aspirations of a 65% gross margin and 30% Ebit margin are achievable. F&P Healthcare provided net profit guidance for FY 2025 of NZ$310 million-NZ$360 million, which skewed higher than Wilsons analyst Shane Storey had expected. Heading into today's result, Wilsons had been guiding to NZ$320 million. It notes the new guidance includes further improvements in gross margin. Still, Wilsons says the date when F&P Healthcare hits its long-term margin goals "will likely depend on facility scale-up/utilization and how heavily the company invests in growth options (anaesthesia and homecare COPD)." (david.winning@wsj.com; @dwinningWSJ)

1840 ET - Dimerix's licensing deal with UAE-based pharmaceutical group Taiba for its DMX-200 treatment of focal segmental glomerulosclerosis, a rare kidney disease, in the Middle East is a positive surprise to Euroz Hartleys. That's because the bank's forecasts for DMX-200 were based on sales in the U.S. and Europe. Dimerix will receive A$500,000 upfront from Taiba, up to A$120 million in potential milestone payments, and tiered royalties starting at 30% of net sales. "We are now more confident on Dimerix executing further licensing agreements, with major regions such as the U.S. and China still to be licensed," analyst Seth Lizee says. "Dimerix has noted it continues to negotiate with potential licensees, including on various non-binding term sheets received." (david.winning@wsj.com; @dwinningWSJ)

0926 GMT - Short-term financial interests seem to be driving some fund managers to encourage a takeover of Anglo American, says Adam Matthews, chief responsible investment officer of the Church of England Pensions Board, which holds stock in both Anglo and suitor BHP. The Church of England Pensions Board wouldn't support BHP's proposal to acquire Anglo American, Matthews says. A takeover could have implications for how the mining sector can grow to meet commodity demand amid a metals-intensive energy transition, he says. It would also remove a socially responsible miner when the industry needs to be improving standards, Matthews adds. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

(END) Dow Jones Newswires

May 29, 2024 00:58 ET (04:58 GMT)