Baby Bunting Group Ltd (ASX: BBN) and Seek Ltd (ASX: SEK) shares are in focus after both companies released important earnings results.Â
On Tuesday, both companies reported earnings from 1H FY26.
However it hasn’t been smooth sailing as both Baby Bunting and Seek shares fell yesterday.
Following results, the team at Morgans released updated guidance.
It seems the broker sees one as a clear buy.
Let’s see what it had to say.
Baby Bunting shares get slight decrease
For H1 FY26, Baby Bunting reported:
- Total sales of $271.4 million, up 6.7% on the prior corresponding period
- Gross profit increased 10% to $111.4 million
- Net profit after tax (NPAT) came in at $5 million, up 4.1% on last year and in line with guidance.
Investors reacted positively to this news, with Baby Bunting shares up 10% since Monday.
However the team at Morgans seem to think investors should proceed with caution.
The broker has reiterated its hold recommendation on the consumer discretionary stock, along with a slight price target decrease to $2.60 (previously $2.70).Â
From yesterday’s closing price, this indicates an upside of 10.6%.
BBN’s 1H26 pro-forma NPAT was up 4.1% yoy to $5.0m which was in the middle of guidance range ($4.5-$5.5m) driven by comps sales growth, gross margin expansion offset by higher costs. Nine stores have been refurbished to the new store design, and have performed strongly, sales up 25%, which is at the upper end of guidance range of 15-25%. FY26 NPAT guidance has been narrowed to $17.5-$19.5m (was $17-20m).
Seek shares have big upside
Morgans seems much more optimistic on Seek shares moving forward.
The communications stock reported H1 FY26 results on Tuesday that included:
- Sales revenue rose 21% to $647 million
- Net revenue up 12% to $601 million
- EBITDA increased 19% to $267 million
- Record fully franked interim dividend of 27 cents per share, up 13%.
Its share price edged higher following this result, but Morgans believes there’s more room to run for Seek shares.
Seek shares are still down more than 30% year to date.
The broker upgraded its rating to a buy, and kept its price target at $27.50.
From yesterday’s closing price of $16.10, this indicates an upside of 70.8%.
Whilst our DCF-derived price target remains unchanged at A$27.50 the recent sharp share price pullback now results in ~70% TSR upside.
We move to a Buy recommendation accordingly, though SEK has still many questions to answer on the AI threat.
The post Does this broker prefer Baby Bunting or Seek shares following earnings results? appeared first on The Motley Fool Australia.
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- Why Baby Bunting shares are jumping 10% today
Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.