Austal shares climb on FY earnings guidance, Bell Potter upgrade
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The news: Austal shares advanced on the ASX, as Bell Potter hiked its price target on the Perth-based ship builder following the release of its full-year earnings guidance.
The numbers: Austal shares were up 4.8% to $3.41 by 1:25pm AEDT, having gained more than 80% over the last 12 months.
Bell Potter kept its 'buy' rating on Austal and lifted its price target by 19% from $3.25 to $3.75.
At its annual general meeting on Friday, Austal provided updated FY25 EBIT guidance of $80 million, just shy of analysts' average estimate of $83 million, according to Visible Alpha data.
The company's previous guidance consisted of "anticipated EBIT growth". The updated figure equates to EBIT growth of around 42% compared to last year's total of $56.5 million.
The context: Analyst Daniel Laing said that Bell Potter's FY25 forecasts for Austal remain unchanged, as the company is currently tracking its full-year guidance.
However, Bell Potter upgraded its medium- to long-term forecasts, due to improving visibility of the contribution from submarine module production and Austal's long-term shipbuilding program in Australia.
What they said: "The anticipated EBIT growth in FY25 is early evidence that Austral's underlying business is performing strongly and the company believes this signals the end of the transition period (from legacy to new shipbuilding programs) and the start of the execution phase," Laing said.
"This mirrors our own view and de-risks our forecasts, which assume further margin expansion and material revenue growth, as [Austal] progresses through its record orderbook and likely secures a substantial amount of further work in Australia."
The source: Bell Potter research
