0323 GMT - Transurban's likely contract win to widen the Logan Motorway in Queensland counters investor pushback over the tollroad owner's perceived lack of options for growth in Australia, Citi says. Transurban said it has advanced to the Binding Upgrade Proposal stage with the Queensland government. This involves agreeing to the final scope and funding model for the project. Analyst Suraj Nebhani says the announcement is a positive, given investors had been unsettled by Australia's competition regulator blocking Transurban from taking part in the sales process of the Eastlink toll road in Melbourne. "While the project needs to go through the remaining approval stages, we see these as being less problematic given the need for reducing congestion in Brisbane and increasing road capacity in time for the 2032 Olympics," Citi says. (david.winning@wsj.com; @dwinningWSJ)

0312 GMT - The question for Regis Resources remains buy or build, says Citi, after the miner unveiled the outcome of a definitive feasibility study into its McPhillamys gold project in Australia. "We maintain our view that the A$1 billion McPhillamys is an expensive option for a modest-grade greenfield project in the fourth quartile" of the global cost curve, analyst Kate McCutcheon says. Citi highlights that Regis now aims to make a final investment decision in FY 2026. That coincides with group production likely to be in decline, so "we think this makes the project less likely to be approved," Citi says. It retains a neutral call on Regis's stock. (david.winning@wsj.com; @dwinningWSJ)

0310 GMT - Accent Group's earnings multiple could rerate with a successful launch of its Nude Lucy fashion chain in the U.S., Citi analysts say. They note an Australian newspaper report that the retailer will test the brand in the U.S. online and via wholesale, but tell clients that longer-term upside could come from physical stores. They wonder whether Accent might be able to leverage landlord relationships already established by major shareholder Brett Blundy through his holding in jewelry retailer Lovisa. Citi raises its target price 1.6% to A$2.47 and keeps a buy rating on the stock, which is down 1.8% at A$2.18. (stuart.condie@wsj.com)

0302 GMT - Universal Store's annual earnings guidance implies that the Australian fashion retailer is on course to beat market expectations, thanks to top-line growth, Jarden analysts write in a note. They tell clients that the midpoint of Universal's A$46 million-A$47 million underlying Ebit guidance is about 8% higher than the average analyst forecast. They see the company's eponymous chain as potentially the best-quality apparel operator in Australia and think that the slow rollout of its stores could be related to an unwillingness to meet landlord demands in a tough trading environment. Jarden keeps a buy rating on the stock and raises its target price by 24% to A$6.47. Shares are up 2.6% at A$5.92. (stuart.condie@wsj.com)

0234 GMT - Iress's continuing demonstration of cost control helps increase the near-term quality of its earnings, Wilsons analysts write in a note. They tell clients that the Australian financial-software provider's upgraded 1H Ebitda guidance is comfortably ahead of their forecasts and raise their valuation multiple to 24 times earnings, from 22 previously. They call out the potential for Iress to outsource superannuation-fund administration and reckon there is a chance of Iress becoming a takeover target, pointing out that the company hasn't responded to Australian newspaper speculation of private-equity interest. Wilsons lifts its target price by 12% to A$10.26 and keeps a market-weight rating on the stock, which is up 2.5% at A$10.095. (stuart.condie@wsj.com)

0215 GMT - JB Hi-Fi's share-price rally has further to run as consumers prepare to buy AI personal computers as replacements for their existing machines, Citi says. The bank says JB Hi-Fi accounts for 15%-20% of sales of computers in Australia. "Consensus estimates do not appear to be factoring in much, if any, AI-driven benefits," analyst Adrian Lemme says in a note. Citi points to consensus expectations for FY 2025 EBIT being flat on year. In contrast, the bank anticipates 7% growth. Citi lifts its price target by 14% to A$74.00 a share and retains a buy call on the stock. JB Hi-Fi is up 2.3% at A$67.43.(david.winning@wsj.com; @dwinningWSJ)

0202 GMT - Iress needs to show sustained revenue-driven earnings growth to justify its current valuation multiple, Macquarie analysts warn. They think Iress's upgraded 1H guidance is largely cost-driven, and point out that the company is in the final stages of its so-called transformation program. This implies that cost benefits may not be repeated in future periods. They also tell clients in a note that the Australian financial software provider is tracking at the top end of its unchanged annual Ebitda guidance, just short of their forecast. Macquarie rolls forward its valuation and lifts its target price 9.6% to A$9.70, keeping a neutral rating on the stock. Shares are up 3.1% at A$3.155. (stuart.condie@wsj.com)

0140 GMT - While Insignia's earnings profile has improved since February, but below the underlying net profit after tax line, the picture is less appealing, says UBS analyst Scott Russell in a note. For example, he highlights that a new remediation provision of A$135 million (post-tax), equivalent to 8% of market cap, will be booked with FY 2024 results, which comes after a new enforceable undertaking with APRA. "This will not only deliver a large statutory loss for FY24, but will also weigh heavily on free cash flow," says UBS. The Australian wealth management company already had a weak cash flow profile and stretched balance sheet, but management commentary that a new equity raise isn't required should reassure investors, UBS adds.(alice.uribe@wsj.com)

0110 GMT - Insignia expectations for significantly higher underlying net profit after tax than prior consensus looks to be driven by lower costs, says Citi analyst Nigel Pittaway in a note. "We presume this is driven more by sustainable than one-off factors with the new CEO apparently keen to drive cost savings harder and faster," he says. As there are signs new flows could be more positive than Citi was previously expecting, the investment bank lifts its call to neutral from sell, and raises its target price 20% to A$2.65. Insignia rises 5.4% to A$2.64.(alice.uribe@wsj.com)

0049 GMT - Insignia's FY 2024 underlying earnings guidance is better than expectations, but balance sheet concerns remain, say Morgan Stanley analysts in a note. The Australian wealth management company in its June quarter update provided new FY 2024 underlying net profit after tax guidance of A$215 million at the midpoint, which is 14% ahead of MS estimates and 9% ahead of Visible Alpha consensus. Still, MS thinks free cash flow remains a concern. It points to new material A$188 million pre-tax increase in remediation provision, funded via existing debt facility and cash, that MS analysts reckons will likely be a strain on the balance sheet.(alice.uribe@wsj.com)

2352 GMT - The market looks to have priced in a Trump win in the U.S. election, and this is unlikely to change in the short term, even as Biden steps down from the race, says Morningstar Investment Management Australia CIO Asia Pacific Matt Wacher." Certainly if Trump is elected tax cuts will be stimulatory, but this could be offset by higher inflation and subsequently higher interest rates," he adds. Over the longer term, Wacher reckons it's hard to understand the market impact "because anything could happen," and recommends investors "block out the short term noise."(alice.uribe@wsj.com)

2324 GMT - Firming expectations for cash rate rises in Australia spell out a difficult equation for non-bank financial institutions, say Citi analysts Thomas Strong and Brendan Sproules in a note. "A rising cash rate will likely hurt demand for credit and cause incremental credit stress," they say. There does appear to be some green shoots for NBFIs around mortgage credit and market share in flow, Citi reckons this gets overwhelmed by the difficult scenario painted by the inverted yield curve. This keeps the investment bank neutral on the sector, and "mindful of cheap valuations but growing macro risk elongating an earnings recovery." Its order of preference is Liberty, AFG, Latitude, Pepper Money and Resimac. (alice.uribe@wsj.com)

2249 GMT - The level of Australian mortgage holders deemed to be at risk of home loan stress is set to fall over future months as anticipated tax cuts were introduced for Australian income earners from the first week of July, says new research from Roy Morgan. It finds that mortgage stress increased in June by 0.6% compared the previous month, but still remains below record highs reached earlier this year. At the same time, RM finds that mortgages at risk will likely fall in July, August and September, even if there are further interest rate increases in August and September by +0.5% to 4.85%. (alice.uribe@wsj.com)

0530 GMT - Macquarie likely saw improved conditions in all divisions in 1Q FY 2025, with the possible exception of the banking and financial services unit, say Morgan Stanley analysts in a note. From this MS reckons 1Q FY 2025 earnings are likely to be up or significantly up year-on-year, after an unusually soft 1Q FY 2024. "We think Macquarie is at the start of a multi-year upgrade cycle and move further ahead of consensus, even though our gains on sale remain below mid-cycle levels," says MS. Still, the investment bank thinks it's too early for Macquarie to upgrade guidance.(alice.uribe@wsj.com)

(END) Dow Jones Newswires

July 23, 2024 01:00 ET (05:00 GMT)