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Investing.com - Goldman Sachs has upgraded Computershare Limited (ASX:CPU) (OTC:CMSQY) from Sell to Neutral and raised its price target to AUD39.50 from AUD39.00. The company has demonstrated strong performance with a 40.57% return over the past year.
The upgrade is primarily based on valuation, with the stock now trading at 16.6x one-year forward consensus earnings per share, which Goldman Sachs notes is broadly in line with historical long-term averages. According to InvestingPro data, the stock’s current P/E ratio stands at 23.16, with a notably low PEG ratio of 0.29, suggesting attractive valuation relative to its growth prospects. The company has maintained dividend payments for an impressive 32 consecutive years.
Goldman Sachs believes Computershare’s fiscal year 2026 guidance is achievable despite potential pressure on margin income from cash rate cuts and weaker expected transaction revenues. The firm identified several levers for FY26 including potential upside to margin balances, increased corporate action revenues, repricing opportunities, and improved cost control. InvestingPro analysis shows the company maintains a strong financial health score of GREAT, with a comfortable current ratio of 2.2, supporting its ability to meet near-term obligations.
The research note highlighted that Computershare’s hedging strategy is helping to manage the impact of cash rate cuts, smoothing out the effects despite unchanged economic sensitivity.
Goldman Sachs also pointed to future catalysts including reduced below-the-line costs from FY28 onward, which should bring statutory results closer to management earnings, as well as potential balance sheet optimization through accretive mergers and acquisitions.
In other recent news, Computershare Limited has received an upgrade from Jefferies, shifting from a Hold to a Buy rating. This change comes with an increased price target set at AUD46.00, up from the previous AUD39.50. Jefferies attributes this upgrade to an improvement in Computershare’s earnings quality. The company has demonstrated better cash generation and higher EBIT Ex-MI margins at the operational level. These developments reflect positively on Computershare’s financial health and operational efficiency. The upgrade by Jefferies indicates a more favorable outlook for Computershare based on its recent performance metrics. Investors may find this information useful as it highlights the company’s strengthened financial position.
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