Mining giant BHP Group will deliver its first half results this time next week and Macquarie Research expects a strong result, super-charged by buoyant iron ore prices.

“Petroleum EBITDA is expected to increase 15 per cent while copper and coal reduce 17 per cent and 46 per cent half on half,” the investment bank wrote.

“Iron ore forecast EBITDA of $US7.0 billion is little changed and in line with consensus and accounts for around 60 per cent of group EBITDA.”

Macquarie expects BHP’s interim dividend payment may surprise on the upside, although it cautions about the prospect of the company returning additional capital to shareholders through a special dividend.

Kathmandu shares skidded today following a downgrade from Credit Suisse.

The investment bank cut its rating on the high-flying retailer to neutral from outperform, a move driven by the company’s recent share price strength.

“We believe the current share price more accurately reflects a balanced risk/reward presented by Rip Curl, the risks of merger and acquisition integration, and retail operating risk,” Credit Suisse told clients.

Kathmandu shares soared to six-year highs last week after delivering a positive trading update, briefly seeing its year to date gains soar to 12 per cent. However, it shares have succumbed to profit-taking in recent days, including today. KMD is currently off 1.5 per cent to $3.36.

REA Group has been downgraded by analysts at Macquarie Bank due to valuation concerns.

“This [company’s first half result was] solid, and REA has executed well to continue building yield and protect the earnings outlook of the business in the face of volume headwinds. Earnings growth should accelerate during the half as volumes recover and the business cycles weak comparisons,” the investment bank told clients.

“Having said that, we see this outlook as more-than priced in at 49 times FY20 and 40 times FY21 earnings, and with the business currently trading on a free cash flow yield of 1.9 per cent.

With all the good news priced in, and then some, in Macquarie’s opinion, it’s cut REA to underperform with a price target of $110. REA shares have weakened on the downgrade, sliding 0.5 per cent to $113.99 today.

The proportion of Australian businesses planning to boost hiring levels fell sharply in early 2020, suggesting sluggish economic growth may see employment growth slow in the months ahead.

The National Australia Bank’s business survey revealed confidence and operating conditions remained historic norms in January, showing little sign of recovering after weakening noticeably in recent years.

“The survey suggests more of the same in January. Business conditions moved sideways and there was a small improvement in confidence,” said NAB chief economist Alan Oster.

“While it appears conditions have stabilised after a solid decline since early-2018 they are low and suggest that activity remains weak in the business sector”.

Australia's stock market is in a risk-on mood with strong demand as investors hunt around for bargains, says portfolio manager at Tribeca Investment Partners, Jun Bei Liu. 

"It is pretty busy with the market going to a little bit of risk-on sentiment,'' she says. 

"The buying is domestic focused across the earnings and people are searching for beaten-up sectors, because the market is reasonably expensive we do have investors looking for those [cheap] companies.'' 

For example, Cochlear dropped -5 per cent down to $232 this morning after announcing a $30 million hit to profits, but buyers saw an opportunity and the stock is now less than -0.5 per cent lower at $243.59. And Boral's sharp 10 per cent fall yesterday is easing with shares up 0.8 per cent to $4.64 today. 

After delivering another downgrade on Monday, analysts at Ord Minnett believe much of the bad news is now priced into Boral’s share price.

As such, it’s decided to upgrade the building materials supplier to hold from lighten.

“With FY20 guidance now looking more realistic, we upgrade our recommendation on Boral with a $4.50 target price,” the broker told clients.

Boral shares have recouped some of Monday’s heavy losses today, lifting 1.3 per cent to $4.66.

Buy now pay later hopeful Openpay had operating expenses of $28.4 million for the first half of 2020 and expects to post a before tax loss of between $35 and $40 million for the year. The instalments payment platform hit the ASX boards at the end of 2019, but fell as much as 17.5 per cent on its first day on the boards.

On Tuesday morning shares were sitting at $1.27, a 20 per cent drop on its offer price of $1.60, but a 3.2 per cent gain on Monday's closing price.  The company told investors it was updating guidance and its 2020 full year financials would see earnings before tax of ($35-40m).

It had published the update to “align market expectations for its own expectations in FY20”.

Openpay says it’s in a strong position of liquidity, primarily because it has entered a second debt facility and now has access to an overall $75 million in funding facilities for future growth. The company posted a $14 million loss in 2019.

While Citi may be bearish about the outlook for shares in JB Hi-Fi (see post at 9.26am), UBS has announced a substantial price target upgrade.

Following a 12 per cent surge on Monday, seeing JBH shares jump to fresh record highs, the investment bank has increased its price target to $43, up from $37.80 seen previously. It retains a neutral rating on the stock.

The price target increase was driven by expectations for stronger earnings per share growth.

“Our EPS forecasts rise 3-6 per cent, driven by the stronger 1H20 result and higher like for like sales,” UBS told clients.

“Despite the share price rise, we retain neutral with a lack of downside catalysts and near-term earnings risk to the upside.”

JBH shares have risen 0.5 per cent to $44.93 today, hitting new highs in the process.