OUR QUEST IS NOT TO BE BULLISH OR BEARISH, BUT TO CORRECTLY ASSESS FUTURE TRENDS

Citi rates AFG as Neutral

Australian Finance Group delivered a sound 1H26 result, with profit up 46% on robust volume growth, margin expansion and benign credit quality, Citi notes.

Momentum is expected to carry into 2H, though the broker highlights prior rate hiking cycles have typically reduced new mortgage flows by around -20%.

Outer-year forecasts for volumes and margins are trimmed, reflecting a weaker earnings recovery than previously assumed and EPS forecasts are lower by  -0.7% for FY26 and FY27-FY28 cut by -10% to -13%.

Citi retains a Neutral rating with the target lowered to $2.40 per share from $2.90, driven by the earnings downgrade and a higher valuation discount to banks.

UBS rates DRR as Sell

Deterra Royalties reported first half underling profit and an interim dividend that beat market expectations. BHP Group's ((BHP)) Mining Area C again delivered record volumes and strong realised pricing, UBS notes, while the divestment of non-core precious metals offtake assets bolstered earnings.

Net debt of $149m was -$10m lower than market expectations, reflecting strong portfolio performance. UBS now identifies slightly higher intrinsic value in the business, raising earnings forecasts by 6-7% across FY26-28, and lifting its price target to $4.20 from $3.95.

However, UBS maintains a Sell rating on valuation grounds.

Morgans rates NAB as Sell

Morgans raises its target price for National Australia Bank to $37.27 from $32.56, citing a 1Q26 trading update showing cash earnings up 15% on the 2H25 quarterly average, well ahead of expectations.

The broker upgrades its FY26-28 EPS forecasts by between 4-8%. These changes are driven by stronger revenue, a 2bps lift in net interest margin (NIM) to 1.80% and a -30% fall in impairment charges. It's felt a 22% surge in other income is unlikely to be sustained.

Morgans observes CET1 of 11.5% leaves capital tight relative to peers. Despite improved forecasts, the broker sees the shares trading above fundamental value and retains a Sell rating.