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Investing.com - UBS has raised its price target on Kelsian Group Ltd (ASX:KLS) to AUD5.50 from AUD4.80 while maintaining a Buy rating on the stock.
The price target increase follows Kelsian’s FY25 results, which met guidance at the low end of the range. UBS noted the company’s strong second-half performance in its US AAAHI business, which showed approximately 15% year-over-year EBITDA growth in the second half of FY25 despite some residual LNG drag.
Kelsian’s Marine & Tourism division outperformed expectations despite challenging weather conditions in Queensland. The company’s FY26 EBITDA guidance aligns with consensus estimates, indicating good operational momentum.
The Australian Bus segment performed slightly below expectations as inefficiencies impacted margins, though Kelsian has guided to improvement throughout FY26. This weakness is expected to be more than offset by momentum in the AAAHI business, with full run-rate of existing LNG earnings and the introduction of two new LNG contracts.
UBS forecasts $45 million in free cash flow before dividends for FY26, which would bring Kelsian to the top end of its 2.0-2.5x gearing target range, down from 3.2x in December 2024, despite some delayed capital expenditure.
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