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

Macquarie rates IAG as Downgrade to Underperform from Neutral

Macquarie downgrades Insurance Australia Group to Underperform from Neutral, believing it could be exposed to another -$740m of outstanding Greensill claims.

Credit Suisse, acting for Greensill, is seeking to amend the causation plea from an insurance claim to that of "misleading and deceptive conduct".

The broker does not believe the market is pricing in further downside risks related to the issue and a claim at any level could change how attractive the RACWA acquisition appears, and therefore medium-term earnings growth. Target is lowered to $7.00 from $8.50.

Bell Potter rates NEU as Buy

The European regulator has reversed its initial rejection of Daybue after re-examination, and Bell Potter considers it extremely likely the drug advisory body will formalise the recommendation and approve trofinetide in Europe in two months' time.

The approved label would only be for European patients over five years old compared to the US where patients over two years old are eligible.

Neuren Pharmaceuticals would be eligible to receive a US$35m milestone upon further sales and tiered royalties on EU sales at a rate of 15%–21%. This adds around $2/share to the broker's valuation based on current forecasts.

Buy rating maintained. Target rises to $23.50 from $22.00.

Citi rates QAL as Buy

Qualitas hosted a webcast with management highlighting it has upgraded its long-term Australian funds management earnings (EBITDA) margin from over 50% to over 60% by using AI, Citi remarks.

By using 33 analytical agents across 1,900-plus risk questions for the proprietary credit execution platform, the analyst explains, Qualitas has been able to upgrade its margin outlook.

The update reinforces commentary from GPT Group's ((GPT)) recent "Human & Machine" research, a survey from major tenants, Citi notes, which outlined views that the physical workspace will be more important in an AI world.

Citi highlights that an expected 76% of respondents expect the headcount to remain "stable or grow" over the next two years.

The AI theme in real estate continues to develop, the broker remarks. Target price for Qualitas rises to $4.20 from $4 with an unchanged Buy rating.