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Investing.com - Jefferies downgraded Monadelphous Group (ASX:MND) stock rating to Underperform from Hold on Thursday, while raising its price target to AUD17.00 from AUD16.00.
The engineering services company has not provided a trading update since its first-half 2025 results, suggesting it remains on track to meet its fiscal year 2025 targets of "high single digit revenue growth" with "improving operating margins," according to Jefferies.
These targets align with Jefferies’ forecasts for 8% revenue growth, matching consensus estimates, while the firm projects EBIT margins to grow by 30 basis points compared to the consensus expectation of 59 basis points.
Jefferies expressed comfort that Monadelphous will achieve its qualitative guidance, likely at the lower end of consensus estimates, citing the company’s strong order book which increased during the second half of the fiscal year.
The downgrade to Underperform comes despite the higher price target, with Jefferies citing "demanding valuations" as the primary concern, while noting investors will be focused on the contract pipeline for fiscal year 2026, particularly following the company’s acquisition of HES.
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