0501 GMT - AGL Energy's decision to switch its retail customers to Kaluza and to take a 20% stake in the energy platform has strong echoes of rival Origin Energy's 2020 tie-up with Octopus, RBC Capital Markets analyst Gordon Ramsay writes in a note. Kaluza is a competitor to Octopus's Kraken platform, he tells clients. Ramsay points out that both Australian power companies took a 20% stake in their respective platforms, while customer numbers and total investments are also similar. RBC has a sector perform rating and A$10.00 target price on AGL shares, which are down 1.3% at A$10.35. (stuart.condie@wsj.com)

0455 GMT - APM Human Services's weak trading momentum suggests that shareholders should accept private equity's cash offer for the Australian employment agency, Bell Potter analyst Marcus Barnard says. He reckons that shareholders would be wise to take Maddison Dearborn's offer of A$1.45/share in cash, rather than opt for the uncertainty and potential illiquidity of a scrip alternative. Barnard uses a note to clients to highlight APM's acknowledgement that its FY 2024 earnings and profit will be at the bottom end of its previously downgraded guidance. Bell Potter raises its target price by 3.6% to A$1.45 and cuts its recommendation to hold from buy. Shares are up 1.4% at A$1.405. (stuart.condie@wsj.com)

0240 GMT - Credit quality at Australian banks has been resilient, with majors adopting a conservative approach to provisioning, say Morgan Stanley analysts in a note. The average collective provision coverage has fallen from a peak of around 1.59% of credit risk-weighted assets to around 1.37% currently, MS says, noting that this is still 33 basis points higher than the FY 2019 average, implying an additional buffer of A$4.6 billion above prepandemic levels. "In our view, major banks will be able to further reduce their CP coverage as economic growth improves over the next two years," says MS. It estimates a A$2.5 billion benefit from lower provision coverage between now and the end of FY 2026, with the impact on earnings largest at National Australia Bank and smallest at ANZ. (alice.uribe@wsj.com)

0232 GMT - Australian fund manager Regal's acquisition of private credit-focused investment manager Merricks Capital looks to be a good deal at a "reasonable price," says Bell Potter analyst Marcus Barnard in a note. He says the acquisition will add to Regal's funds under management and enhance its earnings per share. "We believe Regal shares will rise further as investors take note of the increased scale and diversity and the potential upside from net flows, and new fund launches," says BP, adding that the company has strong organic and inorganic growth potential, as well as an entrepreneurial culture. BP keeps its buy call for the stock, but raises its target price 18% to A$4.75. Regal rises 2.8% to A$3.66.(alice.uribe@wsj.com)

0216 GMT - Commonwealth Bank of Australia is the least preferred among major Australian banks for many analysts due to its valuation, but operational performance has started to differentiate over the past 12 months, say Citi analysts Brendan Sproules and Thomas Strong in a note. They see that CBA has "played well" the evolving market dynamics in retail banking, and question whether it's right that the lender's performance should be "discounted forever." Citi reckons improving trends in retail banking and CBA's superior execution to peers should be considered. It favors retail-oriented major banks, led by Westpac, which it has a sell call on, as well as CBA, also deemed a sell. (alice.uribe@wsj.com)

0205 GMT - The A$1.83 billion proposal from Bain Capital Private Equity for troubled autoparts supplier Bapcor looks opportunistic to Citi analyst Sam Teeger. He tells clients in a note that the Australian company remains a good business operating in a favorable industry structure. Bain Capital looks to be jumping on what Teeger calls suboptimal governance and management. He says that the A$5.40/share proposal implies a valuation of 17 times fiscal 2025 earnings, which is broadly in-line with its five-year average. He points out this is still 25% lower than the stock price prior to last month's profit warning. Citi has a neutral rating and A$4.70 target price on the stock, which is up 14% at A$4.96. (stuart.condie@wsj.com)

0146 GMT - Brambles's recent share-price decline and the prospect of stronger cashflows help secure the Australia-listed pallet pooler a new bull. Morgan Stanley analyst Andrew G. Scott raises his recommendation to overweight from equal-weight, pointing out that the stock is trading at a 21% discount to its five-year average price-to-earnings. This looks attractive given Brambles's expectations of double-digit EPS growth in FY 2025 and FY 2026. Scott writes in a note that he anticipates a period of revenue and profit growth as demand picks up, with lower capex requirements boosting cashflow and the potential for capital management. MS lifts target price 5.7% to A$16.60. Shares are up 0.1% at A$14.66. (stuart.condie@wsj.com)

(END) Dow Jones Newswires

June 11, 2024 01:01 ET (05:01 GMT)