0356 GMT - The outlook for Fortescue's earnings--and, consequently, dividends--has weakened as the iron-ore miner faces structural cost pressures, says Morgan Stanley. Fortescue's FY 2027 C1 cost guidance of US$20.50-US$21.75/wet metric ton is roughly 7.8% above consensus midpoint and 13% above FY 2026's. Fortescue faces longer haul distances, likely increasing absolute diesel consumption, says MS. Iron Bridge also remains a drag on earnings, it says. The bank cuts its EPS estimates by 21% for FY 2027 and 18% for FY 2028. Its dividend forecast drops to 60.6 Australian cents a share in FY 2027--from nearly A$1.13/share in FY 2026--implying a 3.3% yield at a 65% payout. MS cuts its share-price target 9.9% to A$15.55 and reiterates an underweight rating. Shares are at A$17.99. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0332 GMT - Promising drilling results from FireFly Metals' Green Bay copper-gold project seem to be having a diminishing impact on the company's share price, as investors move their focus from exploration to the potential development of a mine, say analysts at MA Moelis Australia. "Stocks can't trade on exploration excitement forever," they say. "When the market is wholly convinced there is a real project, eyeballs start to turn towards the detail around delivery." MA thinks there's a risk the market will be underwhelmed by a maiden study on the project, which is likely to be limited by an initial 1.8-million-metric-ton processing rate. It downgrades its rating on the stock to hold from buy and cuts its share-price target to A$1.90 a share from A$2.30. Shares are down 7.0% at A$1.73. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0200 GMT - Catalyst Metals' recent hedging could be a sign that the gold miner is preparing to approve a mill expansion, says UBS analyst Al Harvey. Catalyst last month said it entered into gold forward contracts of 30,000 ounces at 6,075 Australian dollars per ounce. That "may be part of risk management for an upcoming (yet modest) investment cycle, and bolsters our confidence that FID [a final investment decision] may be just around the corner," Harvey says. Catalyst is expected to provide FY27 guidance and an updated 10-year outlook in September. UBS forecasts FY27 production of 132,000 oz at a cost of A$3,066/oz. The bank keeps a buy rating and A$9.00/share target on the stock. Shares are up 0.2% at A$5.77. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0133 GMT - There are encouraging signs that Coronado Global Resources' reset is delivering a better operational performance, says UBS analyst Lachlan Shaw. However, consistency is now required to make the risk-reward more attractive, he says. "Liquidity risk has reduced after the quarter, but the balance sheet remains sensitive to met coal prices, operational disruption and working-capital absorption," says Shaw. UBS has a neutral rating and A$0.21/share target on Coronado. Shares are down 1.4% at roughly A$0.17. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0121 GMT - Transurban gets "a big tick" from UBS analysts for avoiding radical reform to road tolls in Australia's most populous state. The analysts tell clients in a note that significant changes in New South Wales state could have materially reduced the ASX-listed toll-road operator's value. As it is, they hail the company's resolution of complex, multistakeholder negotiations and removal of a long-running overhang on the stock. They acknowledge some uncertainties over traffic impact, but don't think Transurban is unreasonable to suggest that the changes are neutral for valuation. UBS has a last-published neutral rating on the stock and a target price of 14.50 Australian dollars. Shares are up 0.1% at A$14.975. (stuart.condie@wsj.com)
0106 GMT - Analysts at Jefferies remain bullish on Qantas Airways despite the potential for fuel prices to stay high due to the U.S.-Iran conflict. Analysts Anthony Moulder and Amit Kanwatia tell clients in a note that they are raising their expectations for December-half oil and refinery margin trends, pointing to a lack of a clear pathway to conflict de-escalation and pressure on Russian oil production. Also, Australia's inflation remains above the central bank's target range and more interest-rate rises remain likely. Nonetheless, travel demand seems resilient, they say, and remind clients that near-term fuel-cost challenges are only temporary. Jefferies keeps a buy rating but lowers its target price by 6.9% to 11.91 Australian dollars. Shares are flat at A$10.32. (stuart.condie@wsj.com)
0103 GMT - An expectation that Australia's central bank might be done raising interest rates prompts UBS to assess what this means for local REITs. Under this scenario, analyst Solomon Zhang says compression in the yield curve should support strong forward returns for listed REITs over the next 6-12 months. UBS notes that Australia's REITs delivered a total return of 37% over the 12 months that followed the RBA last pausing its rate-hike cycle in November 2023. Then, REITs outperformed stocks on the ASX 200 index, excluding banks and resources companies, by 22%. UBS has buy calls on HMC Capital, GPT, Charter Hall and Ingenia Communities, among other stocks. (david.winning@wsj.com; @dwinningWSJ)
0056 GMT - Morgan Stanley analysts want much more disclosure from Australia's major banks on mortgage-market trends. With government making changes to property related tax concessions, the MS analysts expect investors to use this month's annual result announcement by Commonwealth Bank to pepper the market leader with questions on the level and mix of recent mortgage applications. They also anticipate questions on the response to policy changes from existing and potential property investors, lead indicators on draw-down conversions, and the likely impact of the changes on growth. More broadly, they don't expect Commonwealth, NAB, Westpac or ANZ to provide guidance on earnings, revenue, margins, or loan losses. (stuart.condie@wsj.com)
0047 GMT - Life360's bull at Macquarie sees the launch of a dedicated Apple Watch app offering as a likely tailwind to paid subscriptions. A note from one of the investment bank's analysts highlights the July launch of the watch app, pointing out that it extends the location-tracking platform's reach to younger children yet to own a mobile phone. The analyst explains that this adds to the potential growth of monthly active users, and creates an earlier opportunity for converting users to paid subscribers. This is particularly relevant in the high-value U.S. market, the analyst adds. Macquarie keeps an outperform rating on Life360's Australia-listed stock and lowers its target price 6.0% to 31.10 Australian dollars on moderated hardware and advertising expectations. Shares are up 6.8% at A$27.29. (stuart.condie@wsj.com)
2349 GMT - Origin Energy's maiden guidance for earnings from its Energy Markets in FY 2027 could be higher than investors expect. Still, Morgan Stanley says Origin and rival power generator AGL are its least-preferred stocks among Australian utilities because of lower wholesale electricity prices. MS expects Origin's Energy Markets business to achieve Ebitda of A$1.688 billion in FY 2027. That's above consensus forecasts for A$1.627 billion. It would also represent a broadly in-line outcome with FY 2026 where MS projects Energy Markets Ebitda of A$1.683 billion. Origin is due to report its FY 2026 result on Aug. 13. (david.winning@wsj.com; @dwinningWSJ)
2331 GMT - West African Resources is the cheapest ASX-listed gold stock when measured by its cash flow yield, says Euroz Hartleys. It estimates a cash flow yield of 28.5% for FY26. This is after West African Resources banked A$830 million during the year, as a result of the steady ramp up of its Kiaka mine in Burkina Faso. "Question now is whether they can return this to shareholders," says analyst Michael Scantlebury. West African Resources ended Monday at A$2.88. Its stock is down some 26% since its peak in January, amid a broad pullback in the gold price. Euroz Hartleys notes 2Q gold prices denominated in U.S. dollars and Australian dollars dropped on-quarter by the largest amount since 1Q of 2021. (david.winning@wsj.com; @dwinningWSJ)
Ramelius Resources looks very cheap for a company that's going to generate A$1 billion of operating cash flow annually from FY28, says Euroz Hartleys. Investors have been leery about Ramelius's near-term capex, likely totaling some A$400 million in FY27. Output is forecast at 215,000 oz in FY27, up from 192,000 oz in FY26. Analyst Michael Scantlebury thinks the market should start to focus on Ramelius's cash flow from FY28. Ramelius forecasts A$410 million in dividends in FY29, representing a dividend yield of 6.7%. That's more than double the highest average yield of a gold stock. "We believe that the company will look to increase their share buyback by at least A$100 million (in the short term)," Ord Minnett says. (david.winning@wsj.com; @dwinningWSJ)
2319 GMT -- Key cost support for the iron-ore industry is around $85/metric ton, according to Citi. At that price, roughly 6% of seaborne supply would be either at risk of curtailment or generating low single-digit margins, says the bank. Citi says breakeven prices for iron-ore producers continue to climb. It estimates an industry breakeven price of $66/ton, up 7% since its last update in May 2025. "The curve implies that, while margins remain healthy for the major Australian and Brazilian producers, profitability is coming under increasing pressure for higher-cost producers," the bank says. Citi says it is neutral on iron ore in the near term, with a 0-3 month forecast of $100/ton. Spot iron ore fell 1.7% to $93.70 Monday, according to S&P Global.
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