Australia | Feb 02 2026

It was once feared weight-loss drugs would crush demand for sleep apnoea products. ResMed’s December quarter has shown very much the opposite is true.

• ResMed’s December quarter beats across most metrics
• US mask/device sales the standout
• GLP-1’s support increasing demand, as foreshadowed by management
• Further double-digit earnings growth likely ahead

By Greg Peel

ResMed’s ((RMD)) December quarter result delivered 15% profit growth, representing a 2% beat of consensus. Analysts describe the result as solid across most metrics.

Masks/accessories grew significantly, up 14% year on year (constant currency) in the quarter. Notably, US masks/accessories revenue increased by 16%, including “double-digit” organic growth.

Macquarie notes this is ahead of high-single digit market growth supported by mask launches, new patient starts, re-supply initiatives and market share gains.

Devices saw growth of 7% year on year. US devices grew 8%, with market growth of mid-single digits.

Revenue growth in the residential care software division was only 5% although the company expects a pick-up in that pace to high single-digits by FY27.

ResMed increased the lower end of gross margin guidance to 62-63% for FY26 (up from 61-63%), following a December quarter gross margin of 62.3%, up 310 basis points year on year.

Management is targeting double-digit basis point improvements year on year to FY30. Expansion was driven by manufacturing and logistics efficiencies and component cost improvements.

Currency movements provided a tailwind of some 40 basis points to gross margin, however recent strength in the AUD/USD is expected to affect a neutral impact in the March quarter, and a minor headwind in the June quarter. Management noted this is accounted for in the gross margin guidance.

At the same time, ResMed was able to continue to invest in SG&A (selling, general & administrative expenses) and R&D, which should support ongoing improvements in awareness, demand generation and demand capture, Jarden suggests.

US Strength

A regional split remains, with Americas sales outpacing rest-of-world (11% and 6% respectively) in both masks (16% and 8%) and devices (8% and 5%).

Encouragingly, notes Morgans, rest-of-world mask growth has re-accelerated to market rates despite a tough comparable (11%, following the launch of the A11 in Japan), supported by new fabric-based full face mask launches, re-supply and targeted marketing.

Strong Americas mask growth (16%) appears to Morgans broad-based rather than driven by any unusual one-off, supported via new products, seasonality, promotions, the VirtuOx acquisition, and, notably, healthy re-supply and new patient set-ups, with double-digit growth ex-VirtuOx.

Perhaps Americans are, on average, heavier than rest-of-world?

GLP-1 Tailwind

It is interesting to recall that when GLP-1 weight loss drugs first hit the market, ResMed’s share price tanked on an assumption weight loss would reduce demand for sleep apnea products.

There was, however, a counter-argument from analysts suggesting GLP-1s might actually lead to greater sleep apnoea awareness and thus increased product demand.

They were right.

At the December quarter result, ResMed included three-year, real-world data analysis of obstructive sleep apnea (OSA) patients which highlights that patients on GLP-1 are 11% more likely to initiate positive airway pressure (PAP) therapy, those on GLP-1 and PAP therapy have a higher PAP re-supply rate (up 3.1% at year one, 6.2% at year three).

ResMed points to more motivated patients coming through the GLP-1 channel supporting longer-term adherence to PAP therapy. Morgans believes this supports the structural thesis of expanding diagnosis, higher therapy uptake and growing recurring re-supply revenue.

If there's a new structural theme to re-rate ResMed in a durable way, Canaccord Genuity believes it has to come from owning and controlling diagnostic and referral infrastructure tailored to tech-generated and GLP-1-associated demand.

Some fundamental components are already in place, but the challenge is integrating them into a proprietary architecture that compresses patient capture without compromising clinical rigour.

The model is still evolving but Canaccord believes it could end up looking like direct-to-customer (DTC) from important angles, while preserving the traditional ties with sleep labs, independent diagnostic test facilities, physicians, heat moisture exchange providers, and payors.

Something new is happening structurally, in Canaccord’s view.

The US FDA’s approval of Novo Nordisk’s first-in-class oral GLP-1 Wegovy tablet for weight management, launched in the US, materially broadens the treated pool.

For ResMed, Canaccord sees a clear second order benefit from this GLP-1 activation, particularly when obesity and sleep-disordered breathing are co-managed and a combined continuous positive airway pressure (CPAP) plus GLP-1 regimen is positioned as the gold standard of care.

Capital Management

Ord Minnett forecasts a compound annual growth rate of 11% for ResMed over the broker’s forecast horizon and a net cash position of US$1bn by the end of the fiscal year (June).

This in turn should support increased dividends and/or further capital management initiatives, noting ResMed announced an increase to its share buyback program to “more than US$600m” for FY26 from US$600m with the December quarter report.

ResMed’s cash generation continues to impress, Jarden suggests. Working capital did slow up a little in the quarter but this is expected to reverse in the second half and augment a seasonally much stronger second half cash flow versus the first half.

Jarden suggests this augurs well for ResMed’s buyback, likely to go well above the “more than US$600m”.

Australia | Jan 28 2026

Might the sell-off post Generation Development's December quarter update provide investors with a buying opportunity?

• Generation Development investment bond performance well above consensus
• Self-managed account inflows miss by -2%
• Lumpy mandate flows suggest a second half resurgence
• Brokers all stick to Buy ratings

By Greg Peel

Analysts were somewhat taken aback by a -10% fall in the share price of Generation Development ((GDG)) in response to the company’s December quarter update.

We might look to a holiday-thin market this time of year, or the stock’s 9% run-up from mid-December as underlying causes, but all agree the response was overdone, providing an attractive buying opportunity.

Generation Development Group (market cap $2.2bn) is a diversified financial services business. The group has three divisions: Generation Life, which offers investment bonds and lifetime annuities; Lonsec (acquired in 2024), a leading qualitative financial research house; and Evidentia (acquired in 2025), a leader in self-managed accounts (SMA).

The group’s December quarter investment bond (IB) sales, up 57% year on year, were a record and above the previous quarterly high, and comfortably above consensus. IB net flows were up 70% year on year (again a record quarter) and well above consensus.

Consensus was lacking in forecasting IB market movements over the period, assuming -$27m in losses when $17m gains were achieved. IB funds under management were 4% above consensus, up 7% quarter on quarter and 34% year on year.

So Why the Sell-Off?

Evidentia funds under management grew 6% for the quarter, -2% below consensus. That, apparently, was the issue.

The bottom line appears a growing impatience among investors with the Evidentia acquisition. In FY25, Evidentia missed its funds under management target for the year while still growing revenue by 63% year on year, and more than doubling profit.

Management noted at the time the integration of Lonsec and Evidentia had provided some impediment to near-term growth.

Two quarters into FY26 and Evidentia continues to disappoint. However, analysts acknowledge management’s assurance along with the December quarter report that “quarterly inflows were moderated by the timing of scheme commencements [funds management mandates], with several contracted schemes now scheduled to commence [in the March quarter], providing a high degree of confidence of strong inflows in the second half”.

Flows are expected to see a step-change higher in the March quarter as these benefits are realised. By back-ending this, Bell Potter will require a net movement in funds under management of $7.1bn to achieve its forecasts. Bell Potter views 100% client retention as supportive.

Bell Potter believes $7.1bn is achievable in the second half when factoring in the run-rate from the September quarter and adding the benefit of further progress in building the pipeline.

Importantly, the broker views this as probable ex-market movements, including a flagged Xplore/Hub24 ((HUB)) transfer of $1.5bn booked for the March quarter and given there has been no contribution from mandates yet, but more solutions were launched during the quarter and now represent $4.5bn to-date in FY26.

A long-term ambition to partner with Ironbark Asset Management was also announced. This is expected to drive material mandate and inflow opportunities, in addition to the former. Bell Potter views a $5.0bn normal run-rate, plus Xplore/Hub24 and just 13% conversion equates to the required $7.1bn move.

Looking ahead, despite the lumpy quarterly flows, Citi remains attracted to the structural tailwinds in managed accounts and sees Generation Development as well positioned to capture this robust growth over a multi-year period. Meanwhile, notes Citi, the IB business is tracking well above expectations.

Morgans acknowledges Evidentia FUM figures were below consensus again, which follows a pattern of Evidentia FUM missing expectations since this business was acquired.

While Generation Development’s share price has increased strongly over the last year, the re-rating has been supported by improving overall fundamentals, in Morgans’ view.

This broker has been impressed by the recent step-up in the IB sales trajectory, while the acquisitions of Lonsec and Evidentia have given the group a market-leading position in the fast-growing self-managed accounts (SMA) space.

Macquarie notes Lonsec Research and Ratings continues to perform well, with products researched up 1% quarter on quarter to 1,880 and 49 funds on-boarded.

Macquarie continues to expect tailwinds for Lonsec off competitor weakness.

Australia | Dec 18 2025

Flight Centre has re-rated on competitor woes but following a new acquisition and an improving backdrop analysts see further re-rating potential.

• ?Flight Centre benefitting from competitor disruptions
• Iglu acquisition increases exposure to cruises 
• FY26 should improve significantly after a weak FY25
• Analysts see potentially material upside ahead

By Greg Peel

Sector analysts agree travel agent Flight Centre Travel ((FLT)) has been the beneficiary of the turmoil besetting competitor Corporate Travel Management ((CTD)), leading to a recent share price re-rating of around 19% from late November to early December.

The stock has rallied further following an acquisition announcement.

Flight Centre is to acquire Iglu, the UK's leading online cruise agency, which captures circa 15% of UK cruise bookings and more than 75% of online bookings.

This will be the company’s second cruise acquisition in two years, having acquired Cruise Club in FY25, and comes soon after Flight Centre relaunched its Cruiseabout brand, creating a wholesale cruise division in 2023.

The UK is the world’s third largest cruise market.

The purchase price equates to 7.25x FY26 forecast earnings (including synergies). After acquiring Iglu, Flight Centre's cruise-related total transaction value (TTV) will almost double to surpass $2bn during FY26, with a “stretch target” of $3bn TTV in FY28.

Iglu adds an online cruise platform to the company’s Leisure portfolio that includes Flight Centre, Scott Dunn (global travel agent) and Cruise Club UK, which should generate in excess of $1.5bn TTV during FY26, Macquarie notes, reducing Leisure's strong weighting to the Southern Hemisphere.

Cruise is an attractive market, analysts agree, offering strong growth and higher margins. Both Flight Centre's and Iglu's cruise businesses are seeing sales grow at 15-20% year on year, Macquarie notes, underpinned by a resilient customer base and supply chain that is investing heavily in new ships and partnerships.

The margin profile of cruise is also attractive, with Iglu's 3.1% FY25 earnings margin significantly higher than the 2.2% margin in Flight Centre's Leisure division.

Cycling Tough Times

Flight Centre has lifted FY26 underlying profit guidance to $315-350m from a prior $305-340m to account for the Iglu acquisition, which is expected to be earnings accretive from FY26.

Notably, achieving guidance will require 36/64% first half/second half skew.

While this seems ambitious, analysts generally believe it is quite achievable given Flight Centre struggled in FY25 with Asian-related losses, and the fourth quarter was unusually weak following Trump’s Liberation Day tariff announcements in April, hitting US travel, and conflict in the Middle East (including the Red Sea).

The impact bled into the first quarter FY26, but Morgans notes the second quarter has seen a return to solid growth.

Accelerated profit growth is further expected in the second half FY26 as key projects –-Productive Operations and Global Business Services-– gain momentum and the trading cycle gradually improves, notwithstanding the contribution from Iglu.

After FY26, Canaccord Genuity believes FY27 will improve further, both with improved operational efficiency and general activity, but also provided by cruises for which Flight Centre has markedly increased its exposure and marketing and sales efforts.

The long lead times for those products mean the company has good line of sight on outcomes in FY27. Canaccord believes it provides a secure pathway for growth into FY27.

Morgans points out Iglu brings a proprietary, scalable digital platform that will be rolled out across Flight Centre’s leisure brands, improving omni-channel capability and positioning the company to enter the US and other high growth cruise markets over time.

Management believes there is an opportunity to grow into a world-leading online cruise business.

In addition, Corporate Travel Management’s recent challenges create a meaningful risk of client retention, with Flight Centre well-positioned to capture any client turnover.

Ord Minnett also notes industry feedback suggests Flight Centre could benefit from potential client turnover during the integration process of the merged American Express Global Business Travel and CWT business in the US which was finalised in September after 18 months of regulatory reviews.

One slight concern for Citi is while the Iglu deal metrics appear positive, this broker does worry earnings could be inflated given the strength in cruise demand post-covid.

Australia | Dec 15 2025

The new Rio Tinto CEO’s updated targets for earnings, volumes, costs and capex have been met with mixed responses from analysts.

• Rio Tinto aims to increase earnings 40-50% by 2030
• Volume growth led by copper, iron ore and lithium
• Capital to be released through sale and leasebacks
• Shorter-term targets do not please everyone

By Greg Peel

Rio Tinto’s ((RIO)) capital markets day held earlier this month outlined an aim to increase earnings by 40-50% by 2030 by making the company a “Stronger, Sharper and Simpler” organisation. This is based on consensus prices with the main driver of the improvement being volume growth and cost savings.

Rio expects volume growth in 2025 at circa 7%, and reiterated a 3% compound annual growth rate of copper-equivalent volumes to 2030, led by Oyu Tolgoi (copper), Simandou (iron ore), and lithium.

In 2026, Rio expects only modest volume growth. Iron ore increases 4% year on year as Pilbara recovers and Simandou begins to ramp up, while aluminium is down -3%, normalising after a strong 2025, and copper is down -4% on lower grades at Escondida.

Lithium projects will be delivered to reach circa 200ktpa capacity by 2028, which is down from a previously estimated 225ktpa, with markets and returns to determine further capex.

Rio estimates a US$5-10bn capital release from the sale of non-core operations and infrastructure. Titanium oxide and borates represent around US$4bn of this, with the remainder expected through sale and lease back across infrastructure/mining/processing.

This strategy may increase opex, Morgan Stanley notes, but would be accretive if transactions are at a lower weighted average cost of capital.

Iron Ore

Management noted iron ore prices have outperformed forecasts due to persistent supply disruptions, underestimated depletion rates, sharper than expected grade decline, overstated scrap availability and the resilience of Chinese steel production.

Looking ahead, Rio expects strong demand growth from India and ASEAN countries to offset gradual Chinese declines.

The market will need around 950mt of new capacity, largely to offset -800mt of depletion, in Rio's view. Management noted only some 300mt has been committed, including Simandou, with development timelines also lengthening, leaving a -650mt gap by 2035.

Rio noted its Pilbara system has been running at 360mtpa since September. Morgan Stanley notes a 352Mtpa run-rate is required in the December quarter to meet bottom end of 2025 guidance. While cost guidance was not provided, the company expects Pilbara cost guidance will be similar to this year.

First ore at Simandou is to be delivered next year after major construction began just over a year ago and the rail spur finished five months early. Construction activities are some 60% complete with major works still required.

Rio is targeting 5-10mt of sales in 2026. Barrenjoey sees the target as “a touch soft” but suggests a soft target may be a net positive for market sentiment given the sheer size of the Simandou resource and capacity to suppress global prices.

Lithium

When asked by Morgan Stanley why Rio's lithium growth outlook has been moderated, with 2028 capacity now targeted at 200kt (previously 225kt), the company noted it is prioritising delivery of in-flight projects, and in Canada it will likely develop one spodumene mine to feed its core hydroxide facility rather than two in the near-term.

The company is are still assessing which one, with studies progressing. Management stressed long-term growth aspirations for lithium are about capital intensity and selectivity, rather than confidence in the market, with demand currently in-line with or outstripping forecasts.

Subsequent to the capital markets day presentation, Rio Tinto has since hosted analysts and investors for a “deep dive” presentation into its lithium division. The key takeaway was a downgrade to consensus earnings expectations for the division due to elevated pre-operating costs, with earnings indicated to be slightly lower across 2026-28 (by up to -2% only).

Significant reductions in capex intensity is a key focus for the next generation of unapproved projects, with capex headroom from 2028.

Management outlined potential lithium output growth beyond its 200ktpa target by 2028, contingent on supportive market conditions. This includes 110ktpa from Argentina and 60ktpa from Canada.

Macquarie believes this could be achieved through Fenix Phase 2, a Sal de Vida expansion, Cauchari, and Galaxy (all Argentina). However, water and power supply permits remain key considerations, alongside supportive lithium pricing.

Beyond 2030, Rio has indicated additional output potential from Altoandinos and Maricunga projects, which are not included in its current budget case.

For the first time management provided short-/medium-term cost guidance for key lithium assets. Nameplate costs are unchanged from last year at US$6/kg for Olaroz and US$6–7/kg for Sal de Vida, which is a positive in Macquarie’s view.

Encouragingly, Fenix and Rincon (Argentina) unit costs (at full ramp-up) are guided at US$5/kg and less than US$5/kg, both in the first quartile of the cost curve.

Rio reiterated capital discipline, noting growth capex will stay at around -US$1.1bn in the medium term, even with all expansion options included.

Interestingly for Macquarie, the company confirmed its targeted US$5-10bn of capital release excludes lithium projects, three of which remain under care and maintenance.

Management sees strategic value in retaining downstream processing, which provides customer insights critical for an evolving lithium market.

Macquarie nevertheless sees capital recycling opportunities in Jadar (Serbia), Naraha (Japan), and Mt Cattlin (WA).

Australia | Dec 11 2025

Yet another guidance downgrade from Bapcor brings management’s expectation of a second half turnaround into question.

• Bapcor downgrades first half profit guidance by -59%
• Management retains confidence in H2 improvement; FY26 only downgraded -17%
• Focus on balance sheet risk
• Share price de-rating to date means no Sell ratings
• Could there be a white knight suitor timing his move?

By Greg Peel

Bapcor ((BAP)) is Asia-Pacific's leading provider of vehicle parts, accessories, equipment, service and solutions, with the automotive aftermarket the company’s core business. Bapcor’s stock price has fallen -64% since July.

Since peaking around $8.50 in 2021, the share price has now lost close to -79%. To state shareholders are very unhappy is a grave understatement. Bapcor joined the ASX on 24 April 2014. It's IPO issue price was $1.82.

Yesterday, the shares closed at exactly that level.

A profit warning ahead of the company’s FY25 result was the initial culprit, worth around a -30% fall, but this was followed by an October trading update that led to a big drop in consensus forecasts, and another FY26 profit downgrade this week.

Bapcor’s first half underlying profit is now expected to be $5-8m, down from $14-18m, --a -59% downgrade from midpoint-- with the midpoint -65% below consensus. Full-year FY26 underlying profit is downgraded to $39-41m from $44-49m; a -17% downgrade from midpoint, with the midpoint -18% below consensus.

In Morgan Stanley’s view, one of the market's key bull arguments for Bapcor was that despite several downgrades, missed targets and restructures, the core Trade business was proving resilient, and importantly, was the division where most of the value resides.

Now imagine a familiar phrase echoing through the Bapcor headquarters --Houston, we have a problem!-- as the main reason for the latest downgrade was weakness in the Trade division.

Burson experienced a challenging October-November trading period, recording sales declines in Tools & Equipment, partially offset by growth in parts. The company is implementing targeted price reductions to recover market share, and that is putting pressure on margins.

The good news came from Retail. Autobarn saw improved trading in October-November with 1.3% sales growth, supported by a robust Black Friday performance, while both the Specialised Networks and New Zealand segments are tracking in line with expectations.

Given the group's current trading performance and debt position (FY25 pro forma leverage 2.13x), Bapcor is engaging with its lenders to seek an increase to its leverage covenant for FY26 (from 3.0x).

No Problem

Despite the weaker-than-expected update, management’s confidence in an improved second half will be driven by operational improvements driving top-line sales growth, pricing realignment measures, and the realisation of $20m in pre-tax savings from various cost initiatives.

It was a tough first half, UBS suggests, which requires an even bigger half-on-half uplift versus previous guidance given the first half is lower than previously anticipated.

At the midpoint of guidance, excluding the second half post-tax savings initiatives initiated, guidance implies an improvement to $26m from $6.5m and would suggest a first half/second half underlying skew of 20/80%, UBS calculates.

That’s some skew.

Can They Do It?

Management reiterated confidence in a materially improved second half, but Morgans believes the magnitude and timing of this week's downgrade --coming shortly after the October update-- warrants some caution around second half expectations.

Macquarie warns delivering revised FY26 guidance is critical to provide confidence in the underlying earnings base and alleviate any balance sheet concerns, alongside stabilisation of revenue, earnings and market share in the Trade segment.

Citi is unsure whether Bapcor’s price reductions in its underperforming Trade business will deliver improved performance given the customer base typically values other factors, such as relationships, speed of delivery and inventory availability, as the cost of products in many cases is passed through to the end-consumer. This is likely to mean increased downside risk to second half guidance.

As management continues with the process of integrating operating units into the overall business (from previous acquisitions) as well as reviewing operating practices, it continues to find further problems which require write-downs and/or reduced earnings as they stabilise the business.

Canaccord Genuity does not believe anyone can say conclusively this is the last of the identified problems to emerge into negative earnings outcomes. That said, the reviews are nearing completion and investors should hope (and expect) at the conclusion of those reviews there are no further write-downs, impairments, and impacted earnings outcomes.

Canaccord does not expect those reviews to be fully completed until the second half.

In Canaccord's view, it is the operational weakness that should be of greater concern to investors. Trade holds a privileged position within its markets and is now in a position to be losing share (albeit modestly) and margin as it uses some pricing to maintain share -- this is seen as concerning.

The broker's experience in general suggests these types of issues are slower to turn around than expected. Canaccord knows from balance scorecard outcomes staff engagement and morale are low, and expects that is a slow ship to turn.

Canaccord expects it will happen, but is cautious that it is unlikely to improve materially into the second half and FY27.

Citi believes gearing is now more of a concern, with the company having to work with its lenders to increase the debt covenant for FY26. Morgan Stanley also expects the balance sheet to come under greater focus. Morgans shares the concern.

It is unclear to UBS if further risk from legacy issues being discovered in Tools & Equipment business and execution risk around the operational improvements through the second half still exists.

Given these further earnings deteriorations, UBS warns –you guessed it-- investors may perceive risk around balance sheet.

Could there be a white knight?

Given significant share price weakness, Morgans believes renewed corporate appeal may arise.

To that end, Morgan Stanley and UBS are currently on research restriction, having announced in June 2024 they are acting as financial advisors to Bain Capital Private Equity in relation to the proposed acquisition of Bapcor.