Real estate investment trusts have had a curious year, broking house Morgans says, with occupancy rates strong but share prices on the wane.

In a recent research note to clients, Morgans said the A-REIT index had fallen 15.5% over 12 months despite occupancy being at or near full across the industrial and convenience retail sectors.

Morgans has put the cause down to the swing in the interest rate cycle, with three increases so far this calendar year.

Morgans said:

Weighted average cost of debt rose for most names and FY27 assumptions are higher again.

The broker has identified five companies they rate as buys in the sector. Let’s see who they like.

Qualitas Ltd (ASX: QAL)

This company is a real estate private credit manager, rather than a real estate investment trust, but Morgans believes they are looking cheap at the moment.

They said Qualitas is growing market share as the major banks retreat from the sector.

They added:

Fee-earning funds under management is growing strongly, with a high proportion of repeat borrowers underpinning deployment quality. Near-term re-rating is constrained by broader private credit sector sentiment, though we do not view QAL’s loan book as subject to the same uncertainties as others in the space.

Morgans has a $3.90 share price target on Qualitas.

DigiCo Infrastructure REIT (ASX: DGT)

This company owns the SYD1 data centre, which Morgans describes as “a scarce Tier 1 CBD carrier hotel with secured power in a power constrained market”.

The data centre has an expansion plan on the cards, with Morgans saying the roadmap to full occupancy is well defined.

Morgans said the stock is trading at a significant discount to its net asset value.

Morgans has a price target of $3.60 on DigiCo.

GPT Group Ltd (ASX: GPT)

This company is well diversified across office, retail, and industrial assets, Morgans said, “complemented by a growing funds management platform that the market continues to undervalue”.

They added:

GPT’s scale and liquidity make it one of the most accessible ways to gain exposure to Australian commercial property, and one of the names best positioned to re-rate as the interest rate outlook moderates.

Morgans has a price target of $5.65 on GPT.

HMC Capital Ltd (ASX: HMC)

This alternative asset manager has “a growing, diversified platform spanning energy transition, healthcare infrastructure and daily needs real estate”, Morgans said.

The company’s recurring revenue stream is growing, “with the business progressively transitioning toward a more predictable, fee-based earnings profile”.

Morgans has a price target of $4 on HMC.

Garda Property Group Ltd (ASX: GDF)

Morgans said Garda operates a two-pronged business, generating revenue from both its industrial property portfolio and its private credit lending book.

Morgans has a price target of $1.30 on Garda.

The post 5 buy-rated shares in the ASX real estate sector to consider appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England 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 recommended Qualitas. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Qantas Airways Ltd (ASX: QAN) shares closed 2% higher on Wednesday afternoon, at $9.14.

The increase marks the third consecutive share price increase in as many days, meaning the ASX airline shares have now rebounded 5% this week.

It’s great news for investors after the travel stock tumbled 19% between early August and mid-September. The shares are now down 13% for the year-to-date and 16% lower than 12 months ago.

What caused Qantas shares to fall in August?

Ahead of the company’s FY26 results announcement in late August, the market hesitated about what the company might post. Some investors began selling their shares, expecting the results to disappoint and the shares to fall again.

And they were right.

In late August, Qantas reported a 13.8% year-on-year decline in its underlying profit before tax, and revealed that its statutory profit had fallen around 29%.

For the 12-month period, Qantas reported a 12.7% year-on-year drop in underlying earnings per share to 96 cents. And elsewhere, its $6.2 billion of net debt came in at the middle of its target range of $5.5 billion to $6.9 billion for FY26.

With profits down, management declared a fully-franked final Qantas dividend of 19.8 cents per share and a total dividend of 39.6 cents per share, down 25% from last year’s final payout.

At the same time, renewed conflict in the Middle East and further oil supply constraints have put pressure back on fuel prices. This has put airlines like Qantas under significant pressure. 

As part of its results, Qantas reported that the impact from the Middle East conflict has cost the airline an estimated $420 million to date, largely driven by higher jet fuel costs.

So, why are the shares climbing higher again now?

There hasn’t been any price-sensitive news out of Qantas this week to explain the latest turnaround in investor interest.

It’s likely that this week’s reprieve in oil prices could be helping to boost the airline’s shares higher. Global travel sentiment is also surprisingly resilient.

Trading Economics shows that crude oil fell back below US$89 per barrel on Wednesday from a high of US$105 per barrel last week, driven by progress in the US-Iran peace agreement.

Is it time to snap up the shares before they climb even higher?

It looks like the experts are confident we’ll see some sort of turnaround story in Qantas shares over the next 12 months.

TradingView data shows that the majority (14 out of 16) have a buy/strong buy rating on the shares. Another two rate the stock as a hold. But they all forecast an upside from the current trading level.

The $11.70 average target price implies a potential 28% upside over the next 12 months, at the time of writing. Even the minimum $10.40 target price implies the shares could jump 14% higher. 

The post Qantas shares are climbing higher again! Time to buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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.

CSL Ltd (ASX: CSL) shares have passed $180 this week and are now eyeing the $200 mark. At the time of writing, the share price is $180.04, up 6% for the month and 27% over the past 6 months. Zooming out, CSL shares are still 10% lower over 12 months.

The ASX biotech stock has been through a difficult period. Earnings have faced pressure, Vifor has become a headache, and investors have questioned when the company’s growth engine will fire again. Now, the focus is shifting to recovery.

Here are three things that could determine whether CSL shares will actually get there.

1. Behring needs to fire

The first — and arguably most important — piece of the puzzle is CSL’s plasma therapies business, Behring.

Management is targeting mid-single-digit revenue growth in FY27, with immunoglobulin growth expected to land in the mid-to-high single digits. That’s encouraging on its own.

But revenue growth alone won’t cut it. Investors will want to see that growth flow through to the bottom line. If Behring can deliver stronger volumes while improving profitability, CSL’s earnings trajectory could start looking considerably more attractive.

2. Vifor needs to become less of a problem

Then there’s Vifor. Management expects Vifor revenue to decline by around 25% in FY27 amid generic competition and other headwinds. That’s a sizeable drag on the group.

The good news for CSL shareholders is that the rest of the business doesn’t need Vifor to boom. It needs Behring and Seqirus to demonstrate enough momentum to offset the weakness.

If that happens, investors may increasingly look beyond Vifor’s near-term problems and toward CSL’s longer-term earnings potential instead.

3. Margins need to expand

The third catalyst is efficiency. CSL delivered around US$176 million of cost savings in FY26 and is targeting further transformation savings in FY27.

That matters because margin expansion can turbocharge earnings growth. If CSL can grow revenue while simultaneously trimming its cost base, earnings could grow faster than sales.

And that’s the kind of dynamic that gives investors a reason to reassess how much they’re willing to pay for CSL shares.

So, what about $200?

CSL’s FY27 guidance currently calls for roughly 5% underlying NPAT growth at constant currency. So a sustained move above $200 may ultimately require investors to believe FY27 is the starting point of a multi-year earnings recovery, rather than the end of one.

Behring growth, margin expansion, and a stabilising Vifor business could therefore be the three ingredients CSL needs to pull this off.

There’s also a potential kicker sitting quietly in the background. CSL plans to buy back another A$1.1 billion of shares in FY27, which could provide additional support to earnings per share even without a single extra dollar of revenue.

The post Can CSL shares hit $200? 3 things that need to go right appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther 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 CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.