Author: openjargon

S&P/ASX 200 Index (ASX: XJO) shares are in the red on Friday, down 0.1% to 8,628.2 points.

Brokers have reduced their ratings on several stocks this week.

Let’s take a look.

CSL Ltd (ASX: CSL)

The CSL share price is $97.98, up 0.7% today.

Over the past month, this ASX 200 healthcare share has fallen another 30%.

Jarden downgraded CSL shares from a buy to hold rating on Tuesday.

The broker slashed its 12-month price target from $244 to $191.

This still suggests major potential upside of 95% over the next 12 months.

GrainCorp Ltd (ASX: GNC)

The Graincorp share price is $5.23, down 2.9% and down 20% over the past month.

Morgans downgraded this ASX 200 agribusiness share after the company released its 1H FY26 results.

The broker moved to a hold rating with a $5.62 target, implying 7.5% upside ahead.

In a note, the broker said:

GNC’s 1H26 result was weak but broadly in line with consensus at the NPAT level. Business unit performance was stronger for Agribusiness but materially weaker for Nutrition & Energy given a one-off derivate timing issue.

GNC reported a significantly larger than expected cash outflow and its core cash position was also lower than expected.

The era of special dividends now appears to be over. GNC reiterated its FY26 earnings guidance. 

Looking ahead to FY27, Morgans said dry El Nino conditions and cost pressures would likely lead to a “much smaller crop”.

GNC’s strategic assets are worth materially more than its current share price.

However, given earnings look set to decline again in FY27, the stock is lacking share price catalysts, and we move to a HOLD recommendation.

Healius Ltd (ASX: HLS)

The Healius share price is 37 cents, down 1.4% on Friday.

Over the past five trading days, this ASX healthcare stock has fallen 27%.

Healius shares were smashed after the company issued an FY26 earnings downgrade.

RBC Capital downgraded Healius shares to a sell rating this week.

The broker slashed its 12-month price target from 75 cents to 35 cents.

This indicates the stock is fully priced.

Amotiv Ltd (ASX: AOV)

The Amotiv share price is $6.25, up 0.2% today.

Over the past six months, this ASX consumer discretionary share has fallen 30%.

Citi downgraded Amotiv shares to a hold rating on Tuesday.

The broker slashed its price target from $9.30 to $6.70, indicating limited upside ahead.

Mach7 Technologies Ltd (ASX: M7T)

The Mach7 Technologies share price is 28 cents, up 1.8% today.

In the calendar year to date, this ASX healthcare share has tumbled 59%.

Canaccord Genuity downgraded Mach7 shares to a hold rating with a 27-cent target on Tuesday.

This suggests the stock is fully priced.

The post 5 ASX shares downgraded by brokers this week appeared first on The Motley Fool Australia.

More reading

• Why CBA, Paladin Energy and CSL shares crashed  9% to 17% this week
• CSL shares vs CBA shares: Which is the better buy?
• Buy, hold, sell: Aristocrat, Breville, and Healius shares
• Down 30%: Is this ASX 200 stock a buy after its crash?
• 5 things to watch on the ASX 200 on Friday

Citigroup is an advertising partner of Motley Fool Money. Motley Fool contributor Bronwyn Allen 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 and Mach7 Technologies. 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.

Commonwealth Bank of Australia (ASX: CBA), Paladin Energy Ltd (ASX: PDN), and CSL Ltd (ASX: CSL) shares are closing out a week to forget.

With only half a day of trade left before Friday’s closing bell, the S&P/ASX 200 Index (ASX: XJO) is down 1.3% for the week.

Here’s how these three ASX 200 heavyweights are faring over this same time:

• CBA shares are down 8.7% at $160.58 each
• Paladin Energy shares are down 15.3% at $10.58 each
• CSL shares are down 17.9% at $98.46 each

Ouch!

Here’s what had investors reaching for their sell buttons this week.

CSL shares smashed on guidance cut

Most of the pain for CSL shares was delivered on Monday.

The ASX 200 biotech stock closed the day down a sharp 16% following the release of a trading update, based on a 90-day review by CSL’s interim CEO Gordon Naylor.

Investors were clearly displeased with the lowered full-year FY 2026 revenue and profit expectations.

“Our growth initiatives are working, but the financial benefits will take longer than previously anticipated to materialise. As a result, we have now revised down our 2026 financial year guidance,” Naylor said.

CSL said it expects FY 2026 revenue of around US$15.2 billion on a constant currency basis, down from US$15.6 billion in FY 2025. And the biotech giant is forecasting net profit after tax and amortisation (NPATA) of around US$3.1 billion, excluding restructuring costs and impairments. That’s down from US$3.3 billion the previous year.

Paladin Energy shares slammed on cash outflows

Unlike CSL shares, Paladin Energy took a hit this week despite reporting increasing profits.

Shares in the ASX 200 energy stock closed down 12.1% on Wednesday on the heels of its March quarter update.

Highlights included a 51.3% year-on-year increase in revenue for the nine months to 31 March, to US$209.1 million.

And Paladin Energy swung back into profit, reporting a net profit after tax (NPAT) of US$1.7 million, up from a loss of US$30.1 million in the prior corresponding nine-month period.

However, investors may have been concerned by the nine-month operating cash outflow of US$36.4 million, down from a cash inflow of US$14 million in the prior corresponding period.

Which brings us to…

CBA shares hit on profit decline

Joining Paladin Energy and CSL shares in the ASX doghouse this week, CBA shares closed down 10.4% on Wednesday after the ASX 200 bank released its March quarter results (Q3 FY 2026).

Although the big four bank achieved an unaudited quarterly cash net profit after tax (NPAT) of around $2.7 billion, that was down 1% on CBA’s first-half cash quarterly NPAT average.

Investors also reacted unfavourably to the uncertainty facing the Aussie economy and the bank in the months ahead.

CBA CEO Matt Comyn said:

Conflict in the Middle East is disrupting critical supply chains and contributing to global uncertainty…

Notwithstanding an already strong level of provisioning, we have chosen to further top up our collective provisions in the quarter to reflect heightened macroeconomic risks.

The post Why CBA, Paladin Energy and CSL shares crashed  9% to 17% this week appeared first on The Motley Fool Australia.

More reading

• 5 ASX shares downgraded by brokers this week
• CSL shares vs CBA shares: Which is the better buy?
• Should you buy the dip on CBA shares? Here’s what the experts say
• Why is everyone selling CBA shares?
• Buy, hold, sell: COG Financial Services, Macquarie, CBA shares

Motley Fool contributor Bernd Struben 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.

Mineral Resources Ltd (ASX: MIN) shares have been flying over the past year.

But investors aren’t showing much love for the ASX 200 miner today.

At the time of writing, the Mineral Resources share price is down a sizeable 6.47% to $65.62.

That is a rough day out, especially for a stock that has already climbed more than 20% in 2026 and almost 150% over the past 12 months.

So, why are investors taking some profits off the table today?

Chris Ellison trims his stake

The big talking point today is a sizeable share sale by managing director Chris Ellison.

In an ASX announcement, Mineral Resources said Ellison sold 1.75 million shares on-market between 11 May and 14 May.

The sale was worth about $122.5 million and was completed at a weighted average price of $69.98 per share.

The company said the sale was made for personal financial planning purposes, including the establishment of a family office.

It also said the trade was completed in line with its securities trading policy.

Nonetheless, a sale of this size was always likely to get noticed, especially after such a strong run in the share price.

The other side of the update is that Ellison remains the company’s largest shareholder. He still holds 20.8 million shares, representing 10.54% of issued capital.

Mineral Resources also said this was his first on-market share sale since December 2017.

Lithium weakness adds pressure

While Ellison’s share sale is getting most of the attention, recent lithium price swings are not helping either.

Mineral Resources is being sold on a day when several lithium stocks are also in the red.

Pilbara Minerals Ltd (ASX: PLS) is down 4.23% to $6.11, and Liontown Resources Ltd (ASX: LTR) is sinking 6.20% to $2.345.

Trading Economics shows lithium carbonate in China is sitting around CNY 195,000 per tonne, down 2.7% today

That gives investors another reason to take profits in lithium-exposed shares, especially after the strong run across the sector.

Foolish Takeaway

Mineral Resources has had a huge recovery over the past year, so a pullback was never going to take much news.

Ellison’s sale is large enough to make investors stop and rethink, even though he remains heavily invested in the company.

The weaker lithium session has also weighed on the sector, with several lithium miners in the red.

After a near 150% gain over 12 months, some profit-taking was always going to be a risk.

The post Why this ASX 200 mining stock is sinking 6% today appeared first on The Motley Fool Australia.

More reading

• ASX 200 mining shares smash multi-year highs as key commodity prices rise
• After gains of up to 330%, can these ASX 200 shares go higher?
• ASX lithium stocks to buy amid commodity price rocketing 58% already this year
• Buy, hold, sell: Mineral Resources, Fortescue, Champion Iron shares
• 4 top ASX 200 shares including Rio Tinto and Macquarie notching new 52-week plus highs today

Motley Fool contributor Aaron Teboneras 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.

Artificial intelligence is changing the game for many companies on the ASX, in good ways and bad.

Macquarie has identified two ASX 200 companies that will benefit from the use of AI, but it’s fair to say the companies are nothing at all alike.

Let’s look at the companies they are tipping as winners.

Megaport Ltd (ASX: MP1)

Megaport shares have jumped about 70% over the past month alone, but Macquarie is backing this company to more than double again.

Part of the reason Megaport is so attractive is that it has been winning some big contracts recently.

Just this week, it announced that its subsidiary Latitude.sh had secured three major GPU, CPU, network and storage contracts across two customers, “reinforcing Megaport’s position as a critical infrastructure partner in the accelerating AI ecosystem”.

Megaport said further:

These binding, fixed-term contracts secure committed long-term revenue irrespective of usage, delivering strong returns and aligning with our infrastructure and capital deployment strategies. The combination of Megaport’s foundational network infrastructure automation with Latitude.sh’s compute and storage capabilities has created a global automated infrastructure platform, enabling the combined Group to pursue and secure new value-accretive opportunities.

So what does the company actually do? In short, it provides a “network-as-a-service” platform that allows its customers globally to access computing and storage facilities.

Megaport added this week that the market opportunity remained large.

Since the acquisition of Latitude.sh, Megaport has assessed and continues to evaluate a significant and increasing number of comparable opportunities enabled by its automated global infrastructure capabilities. The Company will remain highly disciplined in assessing similar opportunities, applying rigorous criteria across counterparty credit quality, committed contract terms, attractive paybacks3, and overall returns.

The new customers announced this week were both US-based technology providers.

Following the new deal announcement, Macquarie issued a research note to its clients with a price target on Megaport shares of $26.30, compared to $13.05 currently, implying potential upside of more than 100%.

Breville Group Ltd (ASX: BRG)

Macquarie believes that Breville, the coffee machine and small appliance maker, could benefit from AI in a very different way.

One of the growth drivers for Breville, Macquarie says, is entering new markets, and they believe that AI “will assist with licencing, regulation and safety requirements”.

Macquarie says that Breville’s sales in China, Korea, Mexico, and the Middle East grew at better than 50% in the first half of FY26.

They went on to say:

China and Korea performance, as well as potential Japan and India entry, could see APAC segment growth accelerate. APAC has the potential to be the fastest growing segment, despite including Australia, BRG’s most mature market. Note De’Longhi Coffee products are also available on Amazon in Japan, India and Brazil.

Macquarie has a target price of $37.10 on Breville shares, compared with $28.87 currently.

Breville is valued at $4.11 billion.

The post Macquarie says these two ASX 200 companies will benefit from AI, in very different ways appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: Aristocrat, Breville, and Healius shares
• This ASX tech stock has exploded 75% in a month, but can it climb higher?
• ASX tech shares vs. ATEC ETF: How they fared during sector downturn
• Why Megaport just landed its biggest ever AI infrastructure contract
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Cameron England has positions in Megaport. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. 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.

For many investors, Telstra Group Ltd (ASX: TLS) shares remain one of the first places they look for passive income on the ASX.

I don’t find that very surprising.

The telco giant may not offer the biggest dividend yield on the market, but I think it offers something just as important in the current environment: resilience.

With cost-of-living pressures, rising interest rates, and geopolitical conflict weighing on the economy, defensive income stocks can play a very useful role in a portfolio.

What income could Telstra provide?

According to CommSec, consensus estimates point to Telstra paying shareholders franked dividends of 21 cents per share in FY26 and then 21.5 cents per share in FY27.

Based on the current Telstra share price of $5.37, that implies a forward dividend yield of approximately 3.9% in FY26 and then 4% in FY27.

While that isn’t the highest dividend yield available on the ASX, I don’t think income investing should only be about chasing the largest number.

Why I like Telstra shares for passive income

I think Telstra has defensive qualities that many businesses simply don’t have.

Its mobile and telecommunications networks are essential infrastructure. Households and businesses continue to need connectivity through different economic conditions, which gives Telstra a relatively stable revenue base.

In my opinion, that can be very important when the economy is uncertain.

The company has also spent recent years simplifying its operations, strengthening its mobile business, and focusing more clearly on returns to shareholders.

It has also introduced periodic price increases for its mobile and internet contracts in order to cover inflationary pressures. This supports a growing stream of recurring revenue and has thus far not led to elevated churn levels.

For me, that makes Telstra an appealing option for investors wanting a dependable income stream.

Fully-franked dividends add appeal

Another positive is franking.

The forecast dividends are expected to be largely fully franked, which can increase the after-tax value of the income for eligible Australian investors.

That can make Telstra’s dividend yield more attractive than it first appears, particularly for retirees and income-focused investors.

Foolish Takeaway

I think Telstra shares are a good buy for passive income.

They may not offer the largest yield on the ASX, but they provide defensive exposure, steady cash flow, franked dividends, and a business model that should remain relevant for many years.

In this kind of uncertain market, that combination looks appealing to me.

The post Are Telstra shares a top buy for passive income? appeared first on The Motley Fool Australia.

More reading

• Create a river of dividends for passive income alongside work earnings with ASX stocks
• How to build passive income on the ASX without chasing the highest yield
• Buying Telstra shares today? Here’s the dividend yield you’ll get
• How much is needed in superannuation to target a $5,000 monthly passive income?
• Where I’d invest $10,000 into ASX 200 dividend shares right now

Motley Fool contributor Grace Alvino 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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX energy stock Meridian Energy Ltd (ASX: MEZ) is pushing higher today.

Shares in the dual-listed, New Zealand-based sustainable energy provider closed yesterday trading for $4.81. In morning trade on Thursday, shares are swapping hands for $4.82, up 0.2%.

For some context, the S&P/ASX 200 Index (ASX: XJO) is up 0.6% at this same time.

Longer term, Meridian Energy shares are down 7.2% over a year. That sees the ASX energy stock commanding a market cap of around $12.8 billion.

Meridian Energy shares also trade on a 3.7% unfranked trailing dividend yield.

Here’s what investors are mulling over today.

ASX energy stock lifts on operating update

Meridian Energy shares are in the green following the release of the company’s April operating report.

The ASX energy stock, which sources the majority of its power from hydro, noted rising hydro storage levels following another month of “sizeable inflows”. This followed on a period of unseasonably heavy rainfalls.

Indeed, in the month to 11 May, the company reported that national hydro storage increased from 106% to 119% of the historical average. Breaking that down by region, South Island storage increased to 109% of average levels while North Island storage increased to 201% of average levels.

April also saw a 3.7% year-on-year increase in New Zealand’s national electricity demand. This helped drive an 8.2% increase in Meridian’s retail sales volumes.

Breaking that down by segments, year on year, Meridian’s sales volumes in residential were 25.0% higher, small medium business were 9.2% higher, large business were 11.4% higher, agriculture were 6.1% higher, and corporate were 0.8% higher.

What did Meridian management say?

Commenting on the results that look to be supporting the ASX energy stock today, Meridian CEO Mike Roan said:

We’re maintaining good momentum as we move through the second half of the financial year.

Significant rainfall events in the North Island and solid South Island inflows have boosted national hydro storage to close to 120% of average for this time of the year, meaning the country’s electricity system is exceptionally well fuelled as we enter the cooler months.

What else is happening with the ASX energy stock?

Separately, Meridian reported that it had received consent to build a 120MW solar farm. This will be built alongside an already consented battery energy storage system (BESS) at Bunnythorpe, north of Palmerston North.

Bunnythorpe Energy Park will form part of a NZ$3 billion investment Meridian is making through to 2030 to build new renewable energy capacity.

Guy Waipara, Meridian general manager development, said:

We’re thrilled to receive this approval… Solar energy is playing an increasingly important role in New Zealand’s electricity generation, and we’re excited to bring this to Manawatu.

The post How heavy rainfall is helping this $13 billion ASX energy stock appeared first on The Motley Fool Australia.

More reading

• Meridian Energy’s April retail sales and hydro storage climb in 2026
• Meridian Energy shares: Strong customer growth in March

Motley Fool contributor Bernd Struben 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.

Shares in ASX microcap Nanoveu Ltd (ASX: NVU) have jumped more than 30% after the company said it would acquire a Singapore-based drone company.

Nanoveu said in a statement to the ASX that it would acquire Spinoff Robotics, a company which, “develops and operates proprietary drone platforms, bringing aerial robotics, mechanical design, fluid dynamics and engineering capabilities in-house”.

The consideration for the purchase is three million Nanoveu shares plus four million performance rights subject to milestones being achieved.  

Spinoff Robotics founder Dr Chee How Tan would also be issued two million performance rights, also subject to milestones being achieved.

Purchase leads to total drone solution

Nanoveu said the acquisition meant that it would now be able to offer a full stack drone solution across software, hardware and airframes.

Nanoveu’s technology includes tethered drone solutions, and drones which can operate without GPS, which are highly resistance to jamming.

The company said further re the acquisition:

Spinoff develops clean-sheet aerial platforms engineered from first principles, with full in-house control over airframe, aerodynamics, flight control and on-board sensing, to meet mission-specific requirements. The acquisition will add two technologies validated by tier 1 customers, along with in house-developed proprietary drone products (the ALICE tethered drone and the METRON sub millimetre photogrammetry system). Furthermore, the acquisition will bring underlying engineering capability to design and build next generation purpose-built drones for identified target verticals.

Nanoveu said it would now, “hold every foundational layer required to design and field its own proprietary drone platforms from the ground up across mission profiles ranging from persistent intelligence, surveillance and reconnaissance overwatch to battlefield-grade tactical platforms”.

The company added:

The acquisition arrives at a moment when defence procurement globally is accelerating, allied governments are mandating sovereign and trusted-supply-chain drone capability, and recent geopolitical events have exposed the operational vulnerability of GPS-dependent and RF-reliant aerial platforms.

As well as defence applications, Nanoveu said there was a large market for drone security systems to be used by airports and data centres.

Nanoveu Executive Chairman Dr David Pevcic said regarding the deal:

The proposed acquisition of Spinoff Robotics is a defining step in the build-out of Nanoveu’s autonomous drone platform, providing the in house deployment surface to scale ECS-DoT silicon and validate next-generation edge-AI functions — including multi-chip configurations, GPS-free navigation and mission-specific perception workloads — in one of the highest-volume edge-AI markets. With proprietary airframes and sensing sitting alongside the Company’s silicon, edge-AI IP and autonomy algorithms, Nanoveu is placed to own every layer of the stack required to ship validated reference designs into defence, critical-infrastructure security and industrial inspection.

Shares surge

Nanoveu shares traded as high as 8.4 cents, up 33.3% before settling back to be 12.7% higher at 7.1 cents.

Nanoveu is valued at $68 million.

The post A new drone deal has this ASX microcap share rocketing up appeared first on The Motley Fool Australia.

More reading

• Macquarie says these two ASX 200 companies will benefit from AI, in very different ways
• Are Telstra shares a top buy for passive income?
• How heavy rainfall is helping this $13 billion ASX energy stock
• EOS shares rocket as $726 million order book turns heads
• CSL shares vs CBA shares: Which is the better buy?

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.

It has already been one of the wildest ASX defence stock moves of the past year, and Electro Optic Systems Holdings Ltd (ASX: EOS) is climbing again today.

At the time of writing, the EOS share price is up 8.15% to $9.16.

That means the stock is still down around 3% in 2026, but remains up more than 620% over the past 12 months.

Today’s buying comes after the company gave investors a fresh update on its MARSS acquisition, new Middle East orders, and a much larger combined order book.

MARSS deal moves closer

In its ASX release, EOS said it has agreed revised terms for its acquisition of the assets of the MARSS group business.

MARSS is a counter-drone systems business. Its NiDAR command and control systems are used to detect, track and defeat drone attacks.

The company said the upfront payment of US$36 million is being made today. It also expects the acquisition to complete in coming days.

There is still no guarantee on timing, but the update suggests the deal is moving closer after earlier transaction uncertainty.

EOS also said it will draw down $70 million from a secured term loan facility to help fund the deal. Of that amount, $50 million will go towards the upfront payment, with the balance expected to support transaction costs and general funding needs.

New orders land in the Middle East

The likely part that is getting investors most interested today is the jump in MARSS’ contract pipeline.

EOS said MARSS has secured new May 2026 orders totalling 102 million euros, or about $165 million. Those orders came from an existing customer in the Middle East.

MARSS has also entered an 85 million euro contract with another Middle Eastern military customer.

The contract involves installations for a country-wide drone detection and mitigation system, with NiDAR C2 software at its core.

Most revenue is expected to be earned during 2026 and 2027, with about 70% of cash expected across that period.

Order book gets bigger

The update also gives investors a clearer view of the combined order book.

EOS said MARSS’ order book now stands at 135 million euros, or about $217 million. If the deal completes, this would lift the company’s total order book to a massive $726 million.

The existing order book has also grown from $459 million at the end of December to $509 million on 15 May.

Foolish takeaway

While the MARSS deal is not finished yet, it appears to be moving in the right direction.

If EOS signs off on the deal, the share price could push into new all-time highs. The market would be looking at a bigger business, more defence orders, and stronger exposure to drone defence spending.

The post EOS shares rocket as $726 million order book turns heads appeared first on The Motley Fool Australia.

More reading

• 3 superannuation decisions you’ll regret in retirement
• 3 ASX stocks positioned to benefit from rising global defence budgets
• Down 13% in a week, are EOS shares now too cheap to ignore?
• Brokers name 3 ASX shares to buy right now
• Up 670%: Is it too late to buy this ASX defence stock?

Motley Fool contributor Aaron Teboneras 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 Electro Optic Systems. 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.

Commonwealth Bank of Australia (ASX: CBA) and CSL Ltd (ASX: CSL) are two of the highest-quality businesses on the ASX.

They are also both trading well below their recent highs.

CBA shares are down around 18% from their 52-week high, while CSL shares have fallen to multi-year lows after a very difficult period for the biotechnology giant.

I rate both as buys. But if I could only choose one today, I would lean toward CSL.

The case for CBA shares

CBA is still the highest-quality major bank in Australia, in my view.

It has a powerful deposit franchise, a huge customer base, strong digital capability, and a brand that gives it an advantage across home loans, transaction banking, business banking, and wealth-adjacent services.

The bank has consistently shown over many years that it can generate strong profits, support large dividends, and trade at a premium valuation relative to its peers. Investors trust the business for good reason.

In my opinion, the recent share price fall has simply made the buying case more appealing.

CBA had been priced very strongly, and the market may have been looking for an excuse to take some heat out of the valuation. After an 18% fall from its high, the risk-reward looks better than it did a few months ago.

For investors wanting quality, income, and exposure to Australia’s largest bank, CBA remains a share I would be happy to own.

Why CSL shares get my vote

CSL is a very different situation.

Sentiment toward the biotechnology giant is incredibly weak. The shares are at multi-year lows, the outlook has become more uncertain, and investors are questioning the quality of a business that was once viewed as one of the safest growth names on the ASX.

That is not comfortable. But I think the market may now be treating CSL as if its problems are structural and permanent. I do not see it that way.

CSL still owns world-class healthcare assets across plasma therapies, vaccines, and specialty medicines. It has a global scale, deep scientific capability, long-standing customer relationships, and exposure to markets where demand should keep growing over time.

The company clearly needs to rebuild trust. Guidance downgrades and execution issues are not easy to ignore. Management must prove that the business can return to more reliable growth, improve productivity, and restore confidence.

But if the current issues are largely short term, today’s share price could end up looking too pessimistic.

That is why I would choose CSL shares over CBA for the next five years.

Foolish Takeaway

CBA may be a better business right now in terms of confidence and execution. But I think CSL may offer a better opportunity.

CBA still trades with a quality premium, even after its sell-off. That premium is understandable, but it may limit upside if earnings growth is steady rather than spectacular.

CSL is in a much more difficult place, but the share price already reflects a lot of disappointment.

If CSL stabilises, restores earnings momentum, and shows that its core healthcare franchises remain strong, I think the upside could be meaningful.

In other words, CBA looks like the safer buy. CSL looks like the more compelling recovery buy.

The post CSL shares vs CBA shares: Which is the better buy? appeared first on The Motley Fool Australia.

More reading

• Should you buy the dip on CBA shares? Here’s what the experts say
• Why is everyone selling CBA shares?
• Buy, hold, sell: COG Financial Services, Macquarie, CBA shares
• The CBA share price crash was an accident waiting to happen. Here’s why
• Buy, hold, sell: CBA, Life360, and Macquarie shares

Motley Fool contributor Grace Alvino has positions in CSL and Commonwealth Bank Of Australia. 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.

If you are hunting for some new portfolio additions, then it could pay to hear what Morgans is saying about the three ASX shares in this article.

Does the broker rate them as buys, holds, or sells? Let’s dig deeper into things:

Aristocrat Leisure Ltd (ASX: ALL)

Morgans was impressed with this gaming technology company’s performance in the first half of FY 2026. It notes that Aristocrat outperformed expectations thanks largely to its gaming business.

In response, the broker has retained its buy rating on Aristocrat shares with an improved price target of $67.00. It said:

Aristocrat Leisure (ALL) 1H26 result beat our forecasts and came broadly in line with consensus, despite management’s prior flagging of a softer than usual 1H skew. Gaming was the clear standout – strong outright sales on continued Baron cabinet demand and solid leased adds in a thin content period. Product Madness and Interactive came in below our forecasts, though the latter is complicated by a D&D reclassification and acquisition drag that flatters the headline miss.

Greater clarity on the FY26-29F earnings shape is expected at the July investor day. Capital management remains a key pillar – a $1bn buyback extension marks $5.1bn returned over five years, underpinned by a fortress balance sheet at 0.3x net debt/EBITDA. We now assume a normalised 1H/2H skew and incorporate ~$100m in annualised savings in FY27, lifting EPSA 3% and 4% for FY26-27F respectively.

Breville Group Ltd (ASX: BRG)

Another ASX share that Morgans is positive on is appliance manufacturer Breville.

Following the release of positive updates from peers, the broker has retained its buy rating on Breville’s shares with a $36.75 price target. It commented:

1Q26 updates from key offshore peers have shown broadly positive read-throughs for BRG, despite an ongoing challenging consumer and macro backdrop. We consider small domestic appliance peers with a premiumisation focus (DLG / KitchenAid), innovation-led NPD (SN), high Coffee exposure (DLG) and ongoing geographic expansion (all) as holding strong relevance for BRG.

Sales momentum across these select peers in 1Q26 (DLG +6.6%; Ninja brand +9.1%; KitchenAid +10%) appears broadly positive and supportive of our view for ongoing outperformance from BRG. BUY maintained.

Healius Ltd (ASX: HLS)

Finally, Morgans was disappointed with this healthcare company’s update and sizeable downgrade to earnings.

And given the increased uncertainty over the outlook of its pathology business, the broker has retained its hold rating with a reduced price target of 41 cents. It said:

HLS has materially downgraded FY26 earnings, which we find disappointing given reiterated consensus-aligned guidance at the 1H26 result only three months ago. While Pathology cost control continues to improve and labour optimisation initiatives are gaining traction, weaker volumes, ongoing GP softness and mounting regulatory/funding pressures are offsetting operational progress. Agilex continues to perform relatively well, and HLS has commenced a strategic review following unsolicited interest in the asset.

However, the extent to which value can be crystallised above the original high acquisition multiple remains uncertain given the business’ modest scale and inconsistent earnings trajectory. While a potential Agilex sale could provide balance sheet upside, the downgrade reinforces that sustainable margin recovery within core Pathology remains elusive. We adjust FY26-28 estimates, with our target price decreasing to A$0.41. HOLD.

The post Buy, hold, sell: Aristocrat, Breville, and Healius 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 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.