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

Macquarie rates BWP as Outperform

Higher interest rate expectations have driven low single-digit reductions to Macquarie’s REIT earnings forecasts from FY27 onwards.

The broker anticipates a structural re-rating for Retail and Industrial sectors, while Office faces de-rating risk amid growing concerns over the impact of AI on long-term space demand.

In residential, higher interest rates are expected to weigh on sales volumes and prices, with elevated construction costs, driven by oil prices and supply chain disruptions, adding further pressure on margins and earnings.

More broadly, higher nominal and real bond yields, alongside elevated geopolitical risk, are likely to dampen equity inflows into real estate, constraining assets under management (AUM) growth and funds management earnings.

The target for BWP Trust is unchanged at $3.90. Outperform rating maintained.

UBS rates IAG as Buy

UBS prefers domestic general insurers across its coverage despite FY26 EPS downgrades driven by mark-to-market investment losses.

The broker highlights supportive sector dynamics, including strong pricing momentum in home and motor, rising bond yields, and potential gross written premium upside if Insurance Australia Group and Suncorp  Group ((SUN)) address market share trends.

Insurance Australia remains the top pick, with UBS pointing to upside from RACQ margin improvements, cost efficiencies, and reinsurance profit commissions.

QBE Insurance and insurance brokers are seen as offering value despite softer commercial pricing, while UBS remains cautious on private health insurers due to claims inflation and affordability pressures.

Buy-rated Insurance Australia Group and QBE are preferred, with AUB Group ((AUB)) favoured over Steadfast Group ((SDF)) among brokers.

Target price for Insurance Australia Group moves to $8.70 from $8.55. FY26 EPS forecast slips -5.9%.

Citi rates PME as Buy

Citi highlights Pro Medicus shares have fallen some circa -50% year-to-date, and the analyst adjusts earnings forecasts for the roll-on of already won business to the latter part of the 2H26 and into FY27, and updates USDAUD currency assumptions (negligible impact).

The company announced around a 10% share buyback last week, with around $150m worth of shares to be acquired through to the end of FY27, well below the announced allowance of around $1bn.

Adjusting for the "push out" in sales, the valuation falls to $245 per share. Citi believes Pro Medicus' moat remains intact and is difficult to copy, with its customers "better off than without" its products.

Whether the new target price of $245, down from $300, is reached very much depends on investors' disposition to own SaaS businesses, as well as the specific characteristics of Pro Medicus' business, the analyst explains. Buy rated.