What is Morgans saying about ARB and BHP shares?

The team at Morgans has been busy this week digesting updates and revising their valuation models.

Two popular ASX shares that have been under the magnifying glass are named below. Here’s what the broker is saying about them:

ARB Corporation Ltd (ASX: ARB)

This 4×4 automotive parts company’s shares have come under significant pressure this month after releasing a trading update that fell well short of expectations.

While this was disappointing, the broker remains positive on ARB. It believes that FY 2026 will be a base year for earnings and highlights that several tailwinds are supportive of growth in the coming years.

Morgans has an accumulate rating and $32.00 price target on its shares. It said:

1H26 underlying PBT of A$58m (~16% below pcp; ~14% below cons) reflected softer group sales and margin pressure (AUD/THB weakness and lower factory recoveries), with a pronounced 2Q deterioration (group sales -5.8%). All divisions weakened through the period, with implied Aftermarket sales -4.4% in 2Q26 (vs -1.7% in 2Q25); OEM -43% (vs -2%); and Export flat (vs +20.4%). The softness within the Aftermarket division is somewhat understandable, given the sharp deterioration in our tracked ARB new vehicle sales index through November (-14.8%) and December (-6.8%), dragging 2Q FY26 volumes 6.7% lower vs the pcp. However, the slowing rate of growth within Export is a point of concern (flat in 2Q) as ARB will cycle a more demanding comp in 2H FY26 (2H FY25 A$142m; vs A$125.4m 1H26).

We expect FY26 earnings will reflect a ‘base’ year for ARB to reset margins and resume a more sustainable growth trajectory (MorgansF FY25-28F EPS CAGR +7%). We are encouraged by ongoing US strength (1H26 +26%); a commanding balance sheet position (A$59.4m net cash); and various tailwinds supporting Aftermarket division recovery through CY26 (new OEM launches; network growth/upgrades; and eCommerce launch). Accumulate maintained.

BHP Group Ltd (ASX: BHP)

Morgans was pleased with BHP’s performance during the second quarter. This was particularly the case for its WAIO, Escondida, and Antamina operations.

However, the broker feels that its shares are fairly valued. As a result, it has retained its hold rating with an improved price target of $47.90. The broker commented:

A sound 2Q26 result operationally, with WAIO setting a H1 production record and BHP upgrading guidance at both Escondida and Antamina. The offsetting negative was the separate update on the Jansen Stage 1 potash project, seeing a further budget upgrade to US$8.4bn and leaving concern around possible changes to Jansen Stage 2.

We have applied upgraded metal price forecasts, driving the upgrade in our target price but not transforming the value proposition, with BHP still appearing fair value. In our sector investment strategy we view BHP as a core holding on earnings and portfolio quality grounds as well as dividend profile, we maintain our Hold rating.

The post What is Morgans saying about ARB and BHP shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ARB Corporation. The Motley Fool Australia has recommended ARB Corporation and BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.