Analysts pare ALS earnings estimates but back longer term outlook
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The news: Analysts have pared earnings estimates for laboratory testing group ALS after it flagged a half-year profit hit but have retained their outlook for medium term gains.
The numbers: ALS on Thursday flagged underlying NPAT for the six months to September is expected to be around 5% lower from $158 million a year ago.
Shares in the company slumped more than 7% on the news, and were down another 0.3% to $13.62 in early trading on Friday.
The context: Most analysts trimmed their ALS earnings estimates for FY25, FY26 and FY27 after the company flagged volume headwinds within its minerals division.
Jarden analysts trimmed their price target on ALS to $14.20 from $14.90, but retained their ‘overweight’ rating. Meanwhile Macquarie analysts cut their price target on the stock to $15 from $16.15 and also kept their 'outperform' rating.
What they said: “In our view, some of the elements of the weaker operating earnings should prove transitory, especially the impact of de-leverage from lower commodities volumes which has been driven by delays in right-sizing the company's cost base, in our view," Jarden analysts said.
"Life sciences continues to prove resilient, which is critical to the earnings outlook.”
“We expect exploration cycle to show recovery in CY25 after two down years supported by USD2,500 ($3,671)/oz gold price, plus copper price and gradually improving economic activity post rate cuts,” Macquarie analysts said.
Morningstar analysts said: “Despite the guidance downgrade, we read limited longer term implications and our recently upgraded $10.20 fair value estimate stands".
The sources: Jarden Research, Macquarie research, Morningstar research
