0458 GMT - Incitec Pivot's decision to end talks with Indonesian state-owned PT Pupuk Kalimantan Timur for its fertilizers arm diminishes the likelihood of a trade sale for that business, although doesn't rule it out entirely, says RBC Capital Markets analyst Owen Birrell. A trade sale of the fertilizers business was the bull case for the stock, says Birrell. RBC retains a sector perform rating and A$3.20 target. "In essence, we see IPL business returning to the historic status quo," with company executives effectively ruling out a future demerger on a call, Birrell says. Over the past six months, while a trade sale was on the agenda, shares shifted to a higher earnings multiple. Birrell now expects a return to historic multiples, although buybacks should provide some support over time. Incitec is down 1.7% at A$2.85. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0434 GMT - Telstra's mobile price rises should just about cover potential wage increases heading its way, Jefferies analyst Roger Samuel reckons. He reminds readers of his research notes that the enterprise agreement covering Telstra's workers expires in September. Samuel writes that the telecommunications provider's A$2-A$4 monthly postpaid mobile price rises are equivalent to 4.2%-4.8%, which compares with annual CPI growth of 3.6% in the March quarter. Jefferies has a hold rating and a A$4.00 target price on the stock, which is up 2.4% at A$3.82. (stuart.condie@wsj.com)

0348 GMT - Telstra remains UBS analyst Lucy Huang's preferred pick among Australian telecommunications providers on the expectation that it will continue to lead mobile-market price recovery. Telstra's latest price rises are larger and came sooner than Huang had expected, and support her view that mobiles will be a primary driver of the recovery in providers' return-on-invested-capital over the next few years. She reiterates her buy rating on Telstra and her neutral rating on TPG Telecom. She thinks that TPG, which operates the Vodafone Australia brand, has a slightly higher risk of prepaid customer churn due to its exposure to more price sensitive users. (stuart.condie@wsj.com)

0332 GMT - Nick Scali keeps its bull at Macquarie, where analysts say Australian spending on home furniture remained resilient at the end of fiscal 2024 despite pressure on consumer spending. They tell clients in a note that the proportion of June consumer spending dedicated to furniture was largely in line with the year-earlier period. Foot traffic to Nick Scali's furniture stores in fiscal 2H also looks broadly in line with a year earlier, they say. Macquarie keeps an outperform rating and A$16.10 target price on the stock, which is up 0.7% at A$13.27. (stuart.condie@wsj.com)

0311 GMT - Telstra gets a new bull amid expectations that the telecommunications provider's latest mobile price rises will allow it to increase its dividend. Macquarie analysts lift their recommendation on the stock to outperform from neutral, telling clients in a note that they anticipate an interim dividend of A$0.095 in the December half, up from A$0.09. They see mobile services benefiting Telstra's earnings through the medium term and think that it should report FY 2025 underlying Ebitda of A$8.6 billion, which is toward the upper end of its guidance range. Macquarie lifts its target price 19% to A$4.40. Shares are up 2.4% at A$3.82. (stuart.condie@wsj.com)

0244 GMT - Telstra should be able to lift the lower end of its annual earnings guidance following its latest mobile price rises, Goldman Sachs analysts say in a note. They see the Australian telecommunications provider narrowing its FY 2025 underlying Ebitda guidance to A$8.5 billion-A$8.7 billion, from A$8.4 billion-A$8.7 billion, when it announces FY 2024 results next month. They tell clients that the price rises show the benefit of Telstra's decision to scrap inflation-linked annual increases. They point out that most prices will rise by more than CPI, while holding prices on cheaper plans should mitigate any concerns Telstra is gouging consumers. GS lifts its target price 1% to A$4.35 and keeps a buy rating on the stock, which is up 2.1% at A$3.81. (stuart.condie@wsj.com)

0150 GMT - Shares in gold miner Northern Star look cheap compared with physical metal prices, says Citi's Kate McCutcheon, upgrading the stock to buy from neutral. Citi's target price on Northern Star lifts to A$15.90 from A$15.20. While there is a risk the stock could fall ahead of the company's 4Q results later this month, "NST now screens attractive versus the underlying commodity," McCutcheon says. Northern Star is Citi's second-top pick among Australian gold miners, after Evolution Mining, which is expected to benefit from its exposure to copper prices. Northern Star is down 0.1% at A$12.97. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

2307 GMT -- With global markets shifting from a growth cycle to a slowdown, Macquarie updates its Australian equity strategy, with its analysts saying this type of shift is typically when defensives start to outperform. "We are looking through the near-term risk of RBA hikes given the slowdown and the fact that global central banks have started to ease," Macquarie says in a note. The key changes the investment bank has made to its Aussie equity strategy are an increased exposure to defensives, growth and REITs, while reducing exposure to financials and resources. On financials, Macquarie says credit spreads start to rise in a slowdown, which is negative for banks, so it reduced NAB and CBA.(alice.uribe@wsj.com)

2258 GMT -- Premium rate increases for Australian small-to-medium businesses rose 7.5% on average in the June, versus 10.2% in the previous quarter, say Macquarie analysts in a review of the key metrics for Australian-listed insurance brokers. In a note, the analysts estimate Steadfast and AUB had premium rate increases of 8.6% and 9.4%, respectively, for their Australian portfolios in the June quarter. "While the pace of premium rate increases is moderating in our data, we suspect the moderation is due to underwriting agencies pushing for growth," says Macquarie, which expects the potential for moderating rates of premium growth in future periods for some brokers. The investment bank keeps its outperform calls for Steadfast and AUB, preferring the latter over the former. (alice.uribe@wsj.com)

0526 GMT - Anglo American looks likely to cut guidance for coal production, and potentially for unit costs, after a fire at its Grosvenor site in Australia forced to suspend operations, Berenberg says. The steelmaking coal mine could be offline for much of 2025, Berenberg says, reducing its output forecast to 13.8 million metric tons versus guidance of 17 million-19 million tons. Additionally, Anglo is in the process of selling its coal business, and the mine's suspension, combined with the uncertainty of the restart timing, is likely to impact the speed of the sales process and, potentially, the price, Berenberg says. "That this is the second major incident at Grosvenor since it commenced operations in 2015-16 could also act as a headwind to achieving a full price," analysts write in a research note. (christian.moess@wsj.com)

(END) Dow Jones Newswires

July 10, 2024 00:59 ET (04:59 GMT)