0443 GMT - Brambles' medium-term outlook won't necessarily drive analysts to lift earnings forecasts, but will build confidence in the global pallet giant's free cashflow profile, UBS analysts say. They tell clients in a note that the Australia-listed company's targets for the three years starting FY 2026 puts a floor under free cashflow expectations regardless of levels of investment. They also acknowledge Brambles' ambitions to win new business, but note that taking share from whitewood operators will require capital. UBS has a buy rating and A$19.10 target price on the stock, which is up 2.1% at A$18.71. (stuart.condie@wsj.com)

0137 GMT - A sharp fall in iron-ore prices prompts Macquarie to downgrade its near-term earnings expectations for big producers including BHP and Rio Tinto, although its analysts upgrade those two stocks to a outperform from neutral following their shares' slide. "Equity markets are now pricing in much lower iron-ore prices and we see some value in BHP and Rio at these levels and have upgraded the pair on valuation grounds," they say. Their ASX targets on both stocks rise by 2%, to A$44 and A$120, respectively. They keep an underperform rating and A$14.25 target on Fortescue. "FMG unfortunately with its higher operational leverage feels the full force of iron ore commodity prices without any long term benefit from higher base metals prices (like BHP and Rio)," the analysts say. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0133 GMT - Brambles' gradual transformation into a more analytical business increases the pallet giant's ability to maintain its advantage over pooling or white-wood competitors, Morgan Stanley analyst Andrew G. Scott reckons. He is positive about the Australia-listed company's growing ability to base pricing, recovery, and allocation decisions on deep data. Improved pallet tracking and serialization will support profitability further over time, he adds. MS has a buy rating and A$20.00 target price on the stock, which is up 1.6% at A$18.63. (stuart.condie@wsj.com)

0128 GMT - The worst appears to be behind BWP Trust, says Morgan Stanley, which lifts the stock to equal-weight, from underweight. Analyst Simon Chan says BWP has been affected by the Wesfarmers-owned Bunnings home-improvement chain vacating 14 sites between FY 2018 and FY 2023. Now, alternative sites for Bunnings may not be so readily available. Occupancy rates of circa 99% should be sustainable, after trending at circa 97% in the last few years, MS Says. "As such, we believe following several years of supporting distribution out of capital profits, BWP should fully fund its distribution via operating earnings from FY 2026," the bank says. (david.winning@wsj.com; @dwinningWSJ)

0124 GMT - Region gets a new bear in Morgan Stanley, which is concerned by plans to reposition its malls after years of focusing on acquisitions. Analyst Simon Chan thinks Region's net operating income could be affected for 1-2 years, and be lower than in the past, as assets are affected by outages. "FY 2026 will also see a circa 50 basis points lift in its hedge rate across its debt book, delaying a rebound in earnings," MS says. It prefers Charter Hall Retail REIT and HomeCo Daily Needs REIT among Region's closest peers. "Declining rates/favorable macro conditions should help all property stocks, but Region may lag due to the transitional nature of its income," adds MS, moving to underweight, from overweight. (david.winning@wsj.com; @dwinningWSJ)

0119 GMT - Hub24's guidance for funds under management on its platform of A$115 billion-A$123 billion looks conservative to bull Morgan Stanley. That's because net inflows are running at a rate of A$14 billion-A$16 billion, compared to a target of at least A$11 billion, analyst Joseph Michael says. Also, markets remain buoyant and Hub24 is well placed to win more institutional mandates, with MS highlighting multiple opportunities in a A$1 billion-A$2 billion range. "We think Hub24 has a long runway for FUA growth given it has a low market share of 7% and strong value proposition," MS says. Its price target increases by 9.7% to A$62.00/share. Hub24 is down 0.2% at A$57.09. (david.winning@wsj.com; @dwinningWSJ)

0111 GMT - Gains in mining stocks over the past week appear to be driven by some seasonal commodity restocking following a sharp decline in some prices, says Jefferies analyst Christopher LaFemina. "We do not expect real clarity on demand cyclicality globally until after the U.S. presidential election/inauguration and after the Fed has begun cutting rates," he says in a note. In the meantime, the sector is likely to be range bound but volatile, says LaFemina. BHP is up 0.2% in Sydney at A$39.68/share, after a 3.0% gain last week. The S&P/ASX 300 metals and mining index, which gained 5.0% last week, is up 0.1% at 5261.0. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

0109 GMT - IDP Education can't shake its bear at Jefferies despite the decline in Australian student-placement numbers looking likely to be milder than previously anticipated. Analyst Wei Sim tells clients in a note that even after adjusting his volume assumptions to reflect Australian government caps, he still sees downside to the placement provider's near-term earnings. He reckons that the average analyst forecasts for overhead costs through FY 2027 are too optimistic, and has seen no leading indicators to suggest that industry conditions are improving. The stock has no valuation support, he adds. Jefferies keeps an underperform rating and A$13.00 target price on the stock, which is down 1.1% at A$15.86. (stuart.condie@wsj.com)

0051 GMT - Macquarie analysts aren't overly concerned by the Australian competition regulator's comments on the size of Steadfast Group's market share. The acknowledge the regulator's comments including that the insurance broker and underwriter has grown "under the radar", but tell clients in a note that Steadfast has made only two major broker acquisitions since 2018. They also point out that Steadfast's network structure means that the share of commercial lines it owns is closer to 15% than the 38% observable at the headline level. Macquarie keeps an outperform rating and A$6.80 target price on the stock, which is down 0.4% at A$8.905. (stuart.condie@wsj.com)

0031 GMT - A deterioration in the quality of Australian banks' mortgage books could be the issue to prompt investors to rethink the stretched valuation multiples they are currently afforded, Citi analyst Brendan Sproules writes in a note. He thinks that losses will probably be limited over the current housing cycle, but wonders whether rising delinquencies among newer cohorts of borrowers could be the catalyst for a selloff. Using Commonwealth Bank disclosures as an example, he is alarmed by arrears among those who borrowed in FY 2023 and FY 2024, pointing out that these loans were originated on higher base rates and, presumably, assumptions of higher household expenditure. (stuart.condie@wsj.com)

2316 GMT - Metro Mining's balance sheet doesn't concern Shaw & Partners right now, despite questions from clients. Metro Mining had A$57 million of net debt at end-June, and intends to repay its junior debt before refinancing its facility with Nebari. Shaw analyst Andrew Hines models a junior debt repayment of A$12.0 million in the September quarter with the balance of A$11.3 million in the December quarter. "We assume that post the repayment of the junior debt, Metro will refinance the Nebari debt and royalty with a A$50 million debt facility with traditional lenders," Shaw says. That puts Metro Mining on track for A$139 million of net cash by end-2025, based on cash flow projections, and will be well placed to consider a maiden dividend, Shaw says.(david.winning@wsj.com; @dwinningWSJ)

2301 GMT - Neodymium and praseodymium, or NdPr, prices are moving out of a trough, Ord Minnett says. NdPr prices reached $62/kg on Sept 10 as Northern Rare Earth raised list prices and magnet makers rushed to restock ahead of seasonally stronger demand in September and October. Oxide output rose marginally in August on tight mine supply, analyst Matthew Hope says. He thinks Northern Rare Earth cannot sustain long-term prices of $52/kg, despite being the biggest and most-efficient producer. "The other five rare earths companies in China may be bleeding cash," Ord Minnett says. "We conclude that China cannot sustain ultra-low rare earth oxide prices indefinitely." Ord Minnett believes the sustainable low price is now $60/kg and should average that level in 4Q on tight supply. (david.winning@wsj.com; @dwinningWSJ)

2243 GMT - Citi analysts tell clients in a note that Metcash's recent trading update was in line with market expectations. The grocery, hardware and liquor supplier said total sales were up 6.1% in the first 18 weeks of the fiscal first half, compared to consensus forecasts for a 5.5% increase. Citi says it showed momentum relative to the last update, with sales holding steady in food, improving slightly in hardware and moderating slightly in liquor. Citi retains a neutral rating on Metcash shares, noting that food is tracking below its forecast but hardware and liquor are tracking slightly ahead. (mike.cherney@wsj.com; @Mike_Cherney)

(END) Dow Jones Newswires

September 16, 2024 01:00 ET (05:00 GMT)