0341 GMT - Cloud-accounting software provider Xero remains a key pick among Australia-listed tech and entertainment stocks at Goldman Sachs despite risk that its 2025 margins fall short of analysts' expectations. GS analysts see a step-up in U.S. investment posing some risk to short-term margins, but tell clients in a note that they are increasingly positive on this opportunity behind the expenditure. They are positive on Xero's outlook for the current year, saying that accelerating product development and release is supporting subscriber and revenue-per-user growth both domestically and internationally. GS has a buy rating and A$201.00 target price on the stock, which is up 1.9% A$175.86. (stuart.condie@wsj.com)

0326 GMT - Aristocrat Leisure's reinforcement of its dominance of the global slot-machine market helps turn Goldman Sachs analysts bullish on the Australian company. Raising their recommendation to buy from neutral, the GS analysts tell clients in a note that they are even more confident in earnings growth following Aristocrat's record North American installations in fiscal 2024. They anticipate its share growing beyond 40%. They also approve of Aristocrat's divestment of its Plarium mobile-gaming unit, and the heightened slots focus that implies. A weaker Australian dollar also helps Aristocrat, which generates most of its revenue in the U.S. GS raises its target price 11% to A$78.00. Shares are up 3.7% at A$71.485. (stuart.condie@wsj.com)

0113 GMT - Sigma Healthcare shares rise 7.8% on a positive update for its recently acquired Chemist Warehouse business, reigniting a rally that had looked in danger of stalling. Sigma said 1H like-for-like retail sales at Chemist Warehouse rose 3%. "The big surprise was the 400bp increase in EBIT margin year-over-year resulting in an EBIT of A$437.9 million for 1H," Citi analyst Adrian Lemme says. The result suggests Sigma-Chemist Warehouse is tracking ahead of Citi's forecast for A$800 million of combined proforma EBIT in the first year of ownership. Citi has a neutral call on Sigma. (david.winning@wsj.com; @dwinningWSJ)

0030 GMT - Industrial property owner Goodman has long been a darling of investors, but its shares fall 7.1% today amid the global tech rout. Goodman is betting big on data centers globally as artificial intelligence and cloud computing booms. News that China's DeepSeek had trained a sophisticated AI model at a fraction of the cost of its Silicon Valley rivals has rattled investors in Goodman, which had risen more than 50% in value through last week. In a note, Citi says DeepSeek's advances may ultimately be positive for Goodman and other data-center stocks. "In our view, DeepSeek most likely drives further demand for data centers globally with advanced computational capabilities, high capacity storage, robust networking, energy efficient designs and infrastructure," the bank says. (david.winning@wsj.com; @dwinningWSJ)

0024 GMT - ASX's low earnings growth and moderating futures revenue turn Morgan Stanley analysts bearish on the Australian markets operator. The MS analysts cut their recommendation to underweight from equal-weight, telling clients in a note that the likelihood of low single-digit EPS growth and a valuation multiple of 25 times fiscal 2026 earnings don't offer a strong case for investors. They point out that capital-markets peers Computershare and Macquarie, as well as the five general insurers that they cover, all offer stronger EPS growth prospects. They trim underlying earnings forecasts on lower activity volumes, and cut their target price by 5.1% to A$55.05. Shares are down 4.4% at A$61.12. (stuart.condie@wsj.com)

0015 GMT - Iron-ore prices should find support around US$100-US$110/ton from wet weather in Australia's Pilbara region, says UBS. Rainfall and flooding has already knocked out one of Rio Tinto's railcar dumpers at the East Intercourse Island port facility, which shipped 45 million tons of the company's iron ore in 2024. It's expected to take 3-4 weeks to repair. Analyst Lachlan Shaw notes the wet season in the Pilbara is far from over. Rio Tinto looks to be the most affected, with BHP and Fortescue faring slightly better, UBS says. (david.winning@wsj.com; @dwinningWSJ)

2345 GMT - Generation Development Group's strong December quarter helps keep Morgan Stanley analysts bullish on the Australian funds manager. GDG's funds under management were stronger than forecast by the MS analysts, who write in a note that they see three potential positive catalysts for the stock. First of all, they reckon that GDG is well-placed for inclusion in the S&P/ASX 300 stock index, which would increase its visibility to investors and introduce it to more index-linked portfolios. They also see potential for further accretive M&A, and the acceleration of net inflows. The latter is the most important driver of share price, they add. MS lifts its target price 3.2% to A$4.90 and reiterates its buy rating. Shares are down 0.2% at A$4.31. (stuart.condie@wsj.com)

2345 GMT - The price offered by NinjaOne to acquire software platform Dropsuite looks strong and is likely to succeed unless a rival bidder emerges, Ord Minnett says. NinjaOne's proposal is worth A$5.90/share in cash, valuing Dropsuite at around A$414.5 million. NinjaOne has already secured a commitment from Topline Capital, which owns 31% of Dropsuite's stock, to vote in favor of a deal. Ord Minnett rated Dropsuite a buy before the deal was announced, noting that 4Q metrics also released today were extremely positive with paid user growth of 168,000 setting a new quarterly record. Dropsuite stock is up 31%.(david.winning@wsj.com; @dwinningWSJ)

2332 GMT - AIC Mines didn't change its annual production guidance when releasing its 2Q result today, but Ord Minnett thinks a beat is likely given good results so far. AIC Mines dug up 8% more copper in 2Q than analyst Paul Kaner was expecting, driven by higher grades. While the miner continues to expect output of 12,500 tons of copper in FY 2025, Ord Minnett is forecasting 12,600 tons. "Overall, a solid result from AIC Mines with potential upgrades to production/cost estimates," Ord Minnett says. (david.winning@wsj.com; @dwinningWSJ)

2323 GMT - A key question raised by the performance of DeepSeek and the potential emergence of other cheap AI models is whether they will affect demand for data centers including those operated by NextDC, Citi analyst Siraj Ahmed says. He doesn't anticipate any short-term impact on contracts or demand, and reckons that hyperscalers will continue to deploy capacity in response to customer demand. However, Ahmed tells clients in a note that NextDC shares could still suffer and that there are possible risks to longer-term data-center demand. Citi has a last-published A$20 target price and buy rating on NextDC. Shares are down 8.9% at A$14.49. (stuart.condie@wsj.com)

2307 GMT - Citi analyst Siraj Ahmed would be a buyer of any weakness in Megaport shares stemming from concerns over the potential impact of China's DeepSeek AI. Ahmed tells clients in a note that he doesn't see any direct impact on the Australian software company, which helps businesses to create and manage internet network connections. He actually thinks that the potential for cheaper models such as DeepSeek to drive increased AI adoption could be positive for Megaport, but doesn't rule out any short-term wobbles amid broader uncertainty. (stuart.condie@wsj.com)

2135 GMT - Synlait Milk's maiden 1H Ebitda guidance is much stronger than Forsyth Barr expected, but the bank is sticking with its underperform call on the stock for now. Synlait has signaled 1H Ebitda of NZ$58 million-NZ$63 million. That compares to consensus hopes for FY 2025 of NZ$78 million. "This reflects solid operational execution, as Synlait continues its turnaround with a focus on Ingredients margins (product optimization) and cost control," says analyst Matt Montgomerie. "Our inference is that there hasn't been a material change in Advanced Nutrition performance from its key customers." Synlait's share price is now at its highest level since April last year. (david.winning@wsj.com; @dwinningWSJ)

2132 GMT - Genesis Energy is headed for its second-best 1H earnings result, reckons Forsyth Barr. The New Zealand power generator and retailer took advantage of low wholesale electricity prices to minimize generation operating costs in 2Q and replenish its coal stockpile ahead of winter, analyst Andrew Harvey-Green says. Forsyth Barr expects 1H Ebitdaf of NZ$242 million, and thinks Genesis is well-positioned for 2H as well. So, its FY 2025 Ebitdaf forecast moves up 5% to NZ$472 million, putting Forsyth Barr some NZ$12 million ahead of Genesis's guidance. The upgrade reflects "the strong 2Q outcome, but also rising wholesale electricity prices (which has had a flow on effect to later year forecasts)," says Forsyth Barr, which rates Genesis at neutral. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

January 27, 2025 23:00 ET (04:00 GMT)

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