On Tuesday, JPMorgan updated its outlook on ALS Ltd. (ALQ:AU) (OTC: CPBLF), raising the price target to AUD16.50 from the previous AUD15.00 while maintaining an Overweight rating on the stock. The adjustment follows ALS Ltd.'s first half of the fiscal year 2025 (1H25) results, which were consistent with expectations in terms of revenue and EBIT (earnings before interest and taxes), showing a respective increase of 1.6% and 0.4% compared to consensus.
The recent financial performance of ALS Ltd. has helped to alleviate concerns of a potential downgrade for the full-year forecast. Management's commentary has been positive about the general health of the business and indicated no significant signs of weakening. Despite a decline in group margins to 17.1%, this was attributed primarily to the impacts of recent acquisitions in the Life Sciences sector, which had been anticipated by management.
ALS Ltd. has seen strong momentum in its Life Sciences division and is experiencing a turnaround in the Nuvisan business. Additionally, there is potential for increased exploration activity that could boost the Commodities business. These factors contribute to what JPMorgan views as a solid medium-term outlook for the company.
The firm has reaffirmed its guidance for organic revenue growth for the fiscal year 2025, projecting mid-single-digit growth over the prior corresponding period (pcp). ALS Ltd. also remains committed to achieving its fiscal year 2027 targets, aiming for A$3.3 billion in revenue and A$600 million in EBIT, as confirmed by the company's management.
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