ALS shares lower despite guidance upgrade following first-half profit
Make us a preferred source
Make us a preferred source on Google
The news: Shares in testing and verification services firm ALS fell in afternoon trade despite reporting better than expected net profit after tax for the first half of FY26 and upgrading its FY26 organic revenue growth guidance.
The numbers: At 1:41pm AEDT, shares in ALS dropped 1.02% to $21.27.
ALS reported a year on year increase in net profit after tax of 11.8% to $141.7 million, with underlying NPAT lifting 17.2% to $178.4 million. Underlying revenue also lifted 13.3% to $1.66 billion.
ALS also announced an interim dividend of 19.4 cents per share, which is 2.6% than the dividend declared in the previous corresponding period.
FY26 guidance for organic revenue growth was lifted from 5-7% to 6-8%. For the commodities business, organic revenue growth guidance was revised up to 12-14% from 5-7%, whereas life sciences growth was revised down to 4-6% from 5-7%.
The context: Revenue growth was led by strong organic growth in the commodities business while the life sciences business faced softer growth conditions.
Citi analysts said they were still positive on ALS following its investor call and reiterated their 'buy' rating on the stock and their target price of $19.45. They noted key downside risks included sustained downturn in exploration and further step down form current levels; regulatory risks; a highly competitive market; and risks associated with FX exposure.
RBC Capital Markets analyst Nicholas Daish was also positive on the result and had a 'sector perform' rating on the stock with a price target of $20.75.
What they said: “We expect the market to respond positively to today's result. The upgrade to guidance, driven by the commodities division (ALQ's higher margin, higher returning market exposure) should bode well for earnings performance,” Daish said.
The sources: ASX, RBC Capital Markets research, Citi research
