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

Morgans rates NST as Buy

Northern Star Resources has downgraded gold sales for the second time in FY26, withdrawing full year guidance entirely.

Morgans observes the drivers of the poor operating performance appear to be more systemic and less episodic than originally presented.

FY27 commentary remains positive with the company prioritising delivery of the KCGM mill expansion, which will be the ultimate driver of earnings growth and is targeted for commissioning early in FY27.

The broker reduces forecasts for both KCGM and Yandal, which drives lower headline earnings in FY26 and FY27.

The stock is seen offering a compelling investment case as the premier Australian gold producer. Morgans retains a Buy rating, reducing its target to $30 from $35.

UBS rates ORI as Buy

Orica has settled litigation with CF Industries and has terminated the Yazoo City offtake agreement. UBS notes Orica will pay -US$169.5m to CF Industries, including the share attributable to joint venture partner Nelson Brothers.

It's noted legal fees for this matter have been in the range of -$100m.

Orica’s agreement to acquire its North American joint venture partner's equity strengthens the company's regional explosives footprint, the broker suggests. 

Orica will acquire assets for -US$25m, assume -US$48m of debt and cover -US$85m tied to the CF Industries settlement, explain the analysts. The transaction is expected to be earnings accretive in the first year.

The broker highlights additional exposure to US coal and quarry and construction markets, alongside four emulsion plants, delivery vehicles and ammonium nitrate storage assets.

UBS retains a Buy rating and target of $27.00.

Citi rates PPT as Neutral

Post review of the sale of Perpetual's Wealth Management division, Citi lowers its target price to $17.30 from $19.70. No change in Neutral rating. The deal is viewed as "incrementally positive", as it alleviates balance sheet concerns.

EPS forecasts are tweaked lower for FY26, and cut by -6% to -8% for FY27/FY28, respectively, due to the loss of earnings post sale, alongside a mark to market. 

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Perpetual has today announced the sale of its Wealth Management division to Bain Capital for $500m, ending a process which began in November 2023, notes Citi.

In an initial assessment, the broker expects the Perpetual stock price to trade modestly higher today.

Commentary adds additional earn-out payments of around $75m are possible, partly offset by tax of about -$45-50m and transaction costs near -$30m.

The sale price represents roughly a 15x multiple of forecast FY26 profit for the business. Importantly, the analysts note the transaction should help reduce group leverage and allow repayment of the $400m bridging facility.

Neutral rating. Target $19.70.