MotorCycle Holdings Ltd (ASX: MTO) shares have underperformed over the past year, but after a recent investor day, the analyst team at Morgans believes a rerating might be on the cards.

The broker has just released a new research report into the company, with a buy recommendation and a bullish share price target, to add to the healthy 7.1% dividend yield the company pays.

I’ll get to the specifics of the share price target shortly. First, let’s look at how the company has been travelling.

Record year for MotorCycle Holdings

As the name suggests, MotorCycle Holdings sells motorcycles and other recreational vehicles, such as personal watercraft and all-terrain vehicles, as well as parts and accessories.

Last financial year, the company reported record revenue of $788.7 million, up 21.3% on the previous year, and booked a net profit of $24.1 million, up 33.8%.

The company also moved from a net debt position of $9 million to having net cash of $13 million at the end of June this year.

Chief Executive Officer Matthew Wiesner said while releasing the annual results that it had been “an exceptional year of growth and strategic advancement for MotorCycle Holdings”.

He added:

Our market leadership position strengthened considerably during FY2026 through the continued growth in our wholesale vehicle distribution businesses across ANZ and the acquisition of select business assets of the Peter Stevens Group which was completed on 31 July. It enhances the Group’s national footprint, provides stronger relationships with OEMs, introduces new products and categories and increases our market share.

Mr Wiesner added that the company’s wholesale division was going from strength to strength, with record sales of 20,127 units, up 15% year on year.

MotorCycle Holdings shares looking cheap

Morgans said in their research note that the investor day “reinforced a business transformed in scale and mix, with wholesale driving earnings in a challenging market, retail and data offering the next leg of improvement, and FY31 targets giving clarity on the growth trajectory ahead”.

The broker said MotorCycle Holdings had set a revenue target of $1.2 billion for FY31, pointing to 8% sales growth per year over a five-year period.

They said they were encouraged by the clear strategy and added:

We think the market overlooks MTO’s wholesale business, which has meaningful growth levers across product, categories and partnerships. We see scope for Retail upside from Harley-Davidson scale, ongoing brand rationalisation and data and systems integration. Double-digit earnings growth and a net cash balance sheet look compelling.

Morgans has a price target of $4.30 for MotorCycle Holdings shares compared to $2.71 currently.

If achieved, this would be a 58.6% return.

The post This high-dividend ASX small cap could rise more than 50%: Broker appeared first on The Motley Fool Australia.

More reading

• Nextdc vs WiseTech: Which ASX tech stock is better for a 25 year old investor?
• How I’ll find the best ASX dividend shares for 2027
• CSL shares: Buy, hold, or sell?
• Down more than 50%, are Zip shares too cheap to ignore?
• Tuas vs Temple & Webster: Which beaten-down ASX share offers better value?

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 recommended Harley-Davidson. The Motley Fool Australia has recommended MotorCycle. 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 staged a remarkable recovery over the past few months.

After a difficult period for the healthcare giant, the share price has rebounded strongly as investors have become more optimistic about its future.

But with much of that recovery already behind us, is CSL still worth buying?

Here’s how I see it.

Why I still like CSL

One of the biggest reasons I remain positive on CSL is the strength of its underlying business.

The company is a global leader in plasma-derived medicines, including immunoglobulin therapies used to treat patients with immune deficiencies and other serious medical conditions.

Demand for these treatments has been growing, and I think there is considerable scope for that to continue as diagnosis rates improve and more patients gain access to treatment.

CSL is also particularly well positioned to meet this demand.

Building a global plasma collection network and the manufacturing facilities required to produce these medicines takes enormous investment, specialist knowledge, and regulatory approval.

That gives CSL a competitive position that would be difficult for another company to replicate.

What I would like to see over the next few years is the company making better use of those advantages.

Plasma collection and processing costs have weighed on profitability, and improving efficiency across the network should help CSL generate stronger returns from growing demand.

Encouragingly, management is continuing to address this.

Last week, CSL announced an expanded relationship with Haemonetics, with plans to roll out its latest plasma collection technology across the company’s US collection centres by the end of 2027.

This is one of several initiatives aimed at improving collection efficiency, and I think these incremental improvements could add up over time.

Alongside the development and commercialisation of newer medicines, they give CSL several ways to strengthen earnings through to 2030.

What does the earnings outlook suggest?

I think the next few years should see CSL steadily rebuild its earnings.

Consensus forecasts point to earnings per share (EPS) of $8.96 in FY27, increasing to $9.50 in FY28 and $10.03 in FY29.

That represents annual earnings growth of approximately 6% between FY27 and FY29.

It is a relatively modest pace, but I think it provides a reasonable foundation for a business of CSL’s size.

There is also potential for stronger growth if plasma collection efficiency improves faster than expected, margins recover, or newer products deliver better results.

Of course, none of that is guaranteed. CSL still needs to execute its recovery plans, manage costs, and navigate the challenges that come with developing and commercialising medicines.

But I think the direction of the business looks positive.

Are CSL shares still good value?

This is where I think investors need to adjust their expectations.

CSL shares are trading around $184.65 on Monday, more than double their 52-week low of $90.

That is a substantial recovery, although the shares remain below their 52-week high of $222.47.

At today’s price, CSL trades on a P/E ratio of approximately 21 times forecast FY27 earnings, falling to around 18 times FY29 earnings.

I would no longer describe that as a bargain valuation.

The market is already pricing in some improvement, and I think investors should expect a more gradual recovery in the share price from here.

Nevertheless, I am comfortable paying that sort of multiple for a global healthcare leader with established competitive advantages and a reasonable outlook for earnings growth.

If CSL continues to improve profitability and grow earnings into 2030, I think shareholders could still enjoy good returns over the next few years.

Foolish takeaway

CSL is a buy for me, although the opportunity looks quite different from when the shares were trading closer to $90.

I think the business has plenty of room to improve, particularly as its plasma operations become more efficient and demand for its medicines continues growing.

At around $185, I would be happy to buy CSL shares and give the company time to deliver on that potential through to 2030.

The post CSL shares: Buy, hold, or sell? appeared first on The Motley Fool Australia.

More reading

• I screened the ASX for quality and value. These 5 shares stood out
• CSL vs CBA: Which ASX share is best for SMSFs?
• CSL shares jump 93%: Is the ASX biotech stock a buy, sell or hold for October?
• Are CSL shares a buy after its big news?
• CSL unveils exclusive Alentis deal to advance rare disease treatments

Motley Fool contributor Grace Alvino has positions in CSL. 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.

Zip Co Ltd (ASX: ZIP) shares have fallen more than 50% over the past year, but according to the analyst team at UBS, it could be time to buy the dip.

UBS has a buy rating on Zip shares and a very bullish share price target, which I’ll get to shortly.

First, let’s have a look at their most recent trading results to see how they’re doing.

Share falls depsite record trading results

Zip in mid-August reported total income of $1.35 billion, up 24.6% on FY25, and record cash EBTDA of $268.9 million, up 57.9%.

The company’s total transaction volume (TTV) increased 27.2% to $16.7 billion, while the volume in the US market grew 42.5%.

Net bad debts increased from 1.52% to 1.77% in line with management’s expectations.

Zip Chief Executive Officer Cynthia Scott said it was a strong result.

She added:

Consistent execution has built the platform to deliver our next phase of growth and innovation. In FY26, we exceeded our targets with record cash earnings of $268.9m, up 57.9%, underpinned by material cash earnings growth in both markets. We maintained strong unit economics, expanded operating leverage and reinforced the value of our differentiated business model. Our focus on exceptional customer experiences is translating into stronger engagement. In the US, we achieved more than 40% growth in both TTV and revenue for a second consecutive year while adding new customers at scale. In ANZ, we returned to revenue and Australian receivables growth, led by the continued success of our Zip Plus product.

Ms Scott said the company was targeting cash earnings of $340 million in FY27, which would be a 26% increase.

Importantly, in the US market, the company said that the majority of TTV “continued to be derived from predominantly non-discretionary expenditure, with health, education, auto and transport the fastest growing categories”.

Broker sees Zip shares as cheap

UBS said this was a key strength of the company.

As they said:

Whilst we are watching macro risk, we see these concerns overplayed given Zip’s exposure to non-discretionary spend in the US, and slowing macro potentially catalysing growth in the buy now pay later space as consumers consider non-traditional cash flow management tools over traditional credit.

UBS said they had made minimal adjustments to their outlook for the company, outside of a 1% reduction in expected cash earnings due to another likely interest rate increase in both Australia and the US.

The broker said Zip was trading on a forward price-to-earnings (P/E) ratio of 15 times, which set it up well to achieve a compound annual growth rate in the high teens.

UBS has a price target of $4.40 on Zip shares, compared with the current $2.24.

The post Down more than 50%, are Zip shares too cheap to ignore? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Buy, hold, sell: BHP, Westpac, and Zip shares
• PLS Group vs Zip: Which ASX share could be a 10-bagger?
• Brokers tip these 3 ASX shares to jump 72% to 162%
• Zip vs Block: Which ASX payments share is better?

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 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.