Tag: Stock pick

ASX healthcare stock AVITA Medical Inc (ASX: AVH) recently released earnings results.

This prompted updated guidance from the team at Morgans. 

Let’s see what the company reported and how the broker reacted. 

AVITA Medical

AVITA Medical is a healthcare company specialising in regenerative medicine.

This ASX healthcare stock is down 60% over the last year. 

It released its full-year 2025 financial results last week. 

The company reported: 

• Total revenue of $71.6 million for full year 2025, compared to $64.3 million for full year 2024, representing an increase of approximately 11%, within the company’s revised revenue guidance for the year.
• A gross profit margin of 82.1%.
• A net loss of $48.6 million, or a loss of $1.74 per basic and diluted share, compared to a net loss of $61.8 million, or a loss of $2.39 per basic and diluted share, in the prior year.
• Full year 2026 revenue guidance of between $80 and $85 million, representing growth of approximately 12% to 19% compared to 2025 revenue.

Commenting on the result, Cary Vance, Interim Chief Executive Officer of AVITA Medical, said: 

The fourth quarter marked the close of a year of stabilisation, and the beginning of a more execution-focused phase, for the Company. 

While reimbursement disruption and operational transition weighed on revenue performance in 2025, those issues are now largely behind us, and we are seeing early signs of normalisation in clinician use of RECELL.

We enter 2026 with a clearer commercial focus and a validated portfolio that supports Page 2 growth through deeper utilisation within our core burn and trauma centres, with our priority centred on delivering consistent, execution-led growth quarter by quarter.

Morgans’ view following results

In a note out of the broker on Friday, Morgans said this healthcare stock’s FY25 results broadly met expectations. 

It said FY25 revenue landed slightly ahead of its forecast, while gross margin was a touch softer as secondary products entered the mix. 

Morgans also commented that operating expense was more disciplined, cash burn improved and the cash runway extended via the new debt facility with a small increase in available debt, but more importantly improved trailing revenue covenants. 

We see the below-consensus FY26 guidance range as a positive, to reset market expectations and give a sense the company is aiming to restore credibility around guidance, which has been off the mark in recent years. Gradual but achievable.

Speculative buy recommendation 

Based on this guidance, the team at Morgans retained its speculative buy recommendation and price target of $1.35. 

This ASX healthcare stock closed trading last week at $1.08. 

From this share price, the team at Morgans anticipates an increase of approximately 25%. 

The post Broker tips 25% upside for this ASX healthcare stock following FY25 earnings results appeared first on The Motley Fool Australia.

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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 positions in and has recommended Avita Medical. The Motley Fool Australia has recommended Avita Medical. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Freightways Group Ltd (ASX: FRW) share price is in focus today after the company delivered robust HY26 results, with revenue up 8.5% to $718.2 million and NPAT climbing 17.2% to $52.5 million.

What did Freightways Group report?

• Operating revenue rose 8.5% to $718.2 million
• EBITA increased 12.2% to $96.5 million, with margin improving to 13.4%
• Net profit after tax (NPAT) jumped 17.2% to $52.5 million
• Basic earnings per share lifted 17.2% to 29.3 cents
• Interim dividend up 10.5% to 21 cents per share
• Net debt reduced 6.7% to $587.1 million

What else do investors need to know?

Freightways’ Express Package and Business Mail division showed strong revenue and margin growth, with same-customer volume increases, market share gains, and successful pricing moves. The Australian Allied Express business enjoyed solid volume momentum, boosted by successful Black Friday trading and new customer wins.

The Information Management and Waste Renewal division remained steady, with revenue broadly flat but modest EBITA growth. One-off restructuring costs affected HY26, but these are not expected to repeat, and waste renewal segments like Secure Destruction and Medical Waste saw solid growth.

The recent acquisition of VT Freight Express for A$71 million post-period end adds a complementary B2B express service in Australia, expected to be 6% earnings-per-share accretive in the first year and building out Freightways’ Australian presence.

What’s next for Freightways Group?

Freightways expects continued improvement in same-customer volumes, particularly in New Zealand, as economic conditions gradually recover. The focus remains on rebuilding margins, boosting operational efficiency, and delivering better value for shareholders through disciplined growth.

The group also plans to pursue bolt-on acquisitions to strengthen its niche express offering in Australia, with the recent VT Freight Express acquisition laying a foundation for further growth, while sticking close to its capital management policy.

Freightways Group share price snapshot

Over the past 12 months, Freightways Group shares have risen 27% outperforming the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.

View Original Announcement

The post Freightways Group lifts profit and dividend in HY26 results appeared first on The Motley Fool Australia.

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• GPT Group delivers strong 2025 profit and distribution uplift
• BlueScope Steel books strong 1H FY26 profit and dividend surge
• Contact Energy offers $47m for full King Country Energy ownership
• Ansell shares: earnings jump and dividend rises in FY26 half-year
• The a2 Milk Company impresses with 1H26 earnings—shares in focus

Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

The Contact Energy Ltd (ASX: CEN) share price could attract attention today after the company announced a non-binding offer to acquire the remaining stake in King Country Energy for approximately $47 million. If successful, the move would see Contact take full ownership of all five King Country Energy hydropower stations.

What did Contact Energy report?

• Contact has offered to buy the remaining 24.98% of King Country Energy from King Country Trust for around $47 million.
• The purchase, if finalised, would give Contact full ownership of five hydropower stations with 53MW installed capacity.
• The consideration is expected to be paid in scrip (new Contact shares issued to the Trust or its nominee).
• Consultation and review will occur before any deal is finalised, with completion targeted for Q2 CY26.

What else do investors need to know?

Contact already operates and maintains King Country Energy’s five hydropower stations, supplying renewable power mainly in the King Country and Horowhenua regions. Full ownership would streamline operations and integrate King Country Energy’s assets under the Contact umbrella.

Before the deal can proceed, King Country Trust will run a public consultation and special review, as required by their trust deed. This process is expected to last around a month, and any agreement remains subject to approval from both parties.

What’s next for Contact Energy?

The next step is the Trust’s public consultation, which will help inform its decision on the offer. If both parties agree, a sale and purchase agreement could be signed and completed in the second quarter of calendar year 2026.

If finalised, Contact Energy will issue new shares as payment, consolidating all King Country Energy operations and assets under its direct control. Investors should watch for further updates as the review and consultation progress.

Contact Energy share price snapshot

Over the past 12 months, Contact Energy shares have risen 1%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.

View Original Announcement

The post Contact Energy offers $47m for full King Country Energy ownership appeared first on The Motley Fool Australia.

More reading

• GPT Group delivers strong 2025 profit and distribution uplift
• BlueScope Steel books strong 1H FY26 profit and dividend surge
• Freightways Group lifts profit and dividend in HY26 results
• Ansell shares: earnings jump and dividend rises in FY26 half-year
• The a2 Milk Company impresses with 1H26 earnings—shares in focus

Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

Commonwealth Bank of Australia (ASX: CBA) has once again reminded the market why it trades at a premium.

Following its latest half-year result, the CBA share price rallied strongly as earnings came in ahead of expectations. That reaction doesn’t surprise me. While some brokers continue to argue the stock looks expensive, I’m still holding my CBA shares and I’m comfortable doing so.

The numbers back up the premium

In the half-year to 31 December 2025, CBA delivered cash net profit after tax of $5,445 million, up 6% on the prior corresponding period . Pre-provision profit rose 5% to $8,131 million, reflecting what I see as solid operational discipline across the core franchise.

Return on equity improved to 13.8%, which remains peer-leading. For a bank of this size, maintaining that level of profitability in a competitive lending environment is no small achievement.

Yes, margins were slightly lower and operating expenses increased due to inflation and continued investment in technology. But I actually like seeing that investment. The bank is spending over $1.2 billion on modernising its technology infrastructure and enhancing GenAI capabilities. In my view, that is how it protects its leadership position rather than slowly losing ground.

Credit quality remains a strength

One of the reasons I sleep well owning CBA shares is the quality of its balance sheet.

Loan impairment expense was $319 million, with a loan loss rate of just 6 basis points. Home loan arrears actually decreased in the half, and 87% of home loan customers are now ahead of their scheduled repayments.

To me, that speaks volumes about the resilience of both the customer base and the broader economy. The bank is also carrying a substantial provisioning buffer of around $2.8 billion above expected losses under its central scenario. That’s not the behaviour of an institution cutting things fine.

Capital remains strong too, with a CET1 ratio of 12.3%, comfortably above regulatory minimums. I think that balance sheet strength deserves a premium valuation.

The dividend still matters to me

CBA declared an interim dividend of $2.35 per share, fully franked. That’s up 4% on the prior corresponding period and continues the bank’s track record of rewarding shareholders.

As I’ve written before, yield alone doesn’t tell the full story. For long-term holders, yield on cost can look very different from the headline figure new investors see today. Add full franking credits into the mix and I still see CBA as a core income holding in my portfolio.

Why I’m not selling

I understand the valuation debate. On traditional metrics, CBA is not cheap. But I believe the market pays up for consistency, execution, and franchise strength. This result reinforced all three.

The bank continues to grow lending and deposits, invest in technology, maintain strong capital levels, and deliver reliable dividends. For me, that combination is exactly why I own it.

Foolish takeaway

CBA isn’t a bargain share. But I believe it remains Australia’s highest-quality bank.

With strong earnings, improving credit quality, and a fully franked dividend continuing to grow, I’m still happy to hold my CBA shares and let them compound over time.

The post Here’s why I’m still not selling my CBA shares anytime soon appeared first on The Motley Fool Australia.

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

Northern Star Resources Ltd (ASX: NST) shares have surged over the past year.

During this time, the gold miner’s shares have risen more than 50% in response to a booming gold price.

Is it too late to invest? Here’s what Bell Potter is saying following the company’s first-half result.

What is the broker saying?

Bell Potter was relatively pleased with Northern Star’s half-year results given the operational disruptions it experienced during the period. The broker said:

Highlights: Revenue A$3,414m (BPe A$3,417m, VA A$3,383m), EBITDA A$1,876m (BPe A$1,894m, VA A$1,890m), NPAT A$760m (BPe A$848m, VA A$779m) and EPS A$50cps (BPe A$59cps, VA A$54cps). The result was largely inline, except for a larger than anticipated impairment on exploration assets of A$77.6m (A$24.7m PcP).

Despite the production downgrade in Jan-26 following disruptions across South Kalgoorlie and Jundee, lower mined grades from the Orelia OP (Thunderbox) and a primary crusher failure at KCGM, financial performance remained resilient, with EBITDA margins expanding across both Kalgoorlie and Pogo production centres. NST finished the half with A$293m in net cash.

Hemi delays

One of the key developments from the result was a potential delay to the Hemi project, which it gained with the acquisition of De Grey Mining. Bell Potter explains:

The key development from the announcement was the potential delay for the Hemi project. We had forecasted production commencement in Mar-29, however NST now anticipates this to occur around the beginning of FY30. A short delay, which was likely to be expected.

The broker also notes that meeting full-year production guidance in FY 2026 will require a stronger second half. It adds:

We still need to see a material grade lift across the portfolio to hit guidance (FY26 1,600-1,700koz), which is going to come from Golden Pike North (KCGM/ Kalgoorlie), and a normalization of operations at Yandal.

Should you buy Northern Star shares?

Despite the operational hurdles and the Hemi timing slip, Bell Potter remains positive on this ASX gold stock.

According to the note, the broker has retained its buy rating on Northern Star shares with an improved price target of $35.00.

Based on its current share price of $28.37, this implies potential upside of 23% for investors over the next 12 months.

Commenting on its buy recommendation, Bell Potter said:

Our Target Price lifts to $35.00/sh, and we maintain our Buy recommendation. The 1HFY26 result was already flagged as being impacted by the disruptions outlined above. The question is; how quickly the business can rectify remaining disruptions, in a timely manner to meet the downgraded guidance. We forecast the cashflow inflection point in FY28, with the potential for capital returns/ buybacks should KCGM reach capacity ahead of cash outlays for Hemi.

The post Should you buy Northern Star shares today? 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.

The Ansell Ltd (ASX: ANN) share price is in focus today after the company reported double-digit earnings growth and a lift in EBIT margin for the half-year ended 31 December 2025, while keeping its FY26 adjusted EPS guidance unchanged.

What did Ansell report?

• Total sales rose to US$1,026.6 million, up 0.7% on a reported basis
• EBIT (before significant items) increased to US$146.9 million, up 15.3%
• Adjusted EPS climbed 19% to US66.3¢
• Operating cash flow surged 71.8% to US$91.9 million
• Interim dividend of US26.60¢ declared, up 19.8%, with a 40% payout ratio
• Net Debt/EBITDA fell to 1.5x following share buybacks worth US$47 million

What else do investors need to know?

Ansell managed to offset the effects of higher US tariffs through price increases, especially in its industrial segment, helping maintain profit margins despite subdued trading conditions globally. Both its Industrial and Healthcare divisions delivered improved EBIT margins, thanks to increased synergies from its KBU acquisition and ongoing productivity programs.

The Accelerated Productivity Investment Program (APIP) reached its $50 million annual savings target, with cost-saving measures now shifting to IT upgrades and a system roll-out starting in North America. Ansell also resumed its on-market share buyback, with $47.2 million of shares repurchased in the half, supporting returns to shareholders.

What did Ansell management say?

Retiring Managing Director and CEO Neil Salmon said:

We delivered a strong set of first half results in what were subdued market conditions. Key investments made in recent years contributed to double-digit growth in earnings and a significant improvement in our EBIT margin, including higher synergies from the acquired KBU business and increased savings from our Accelerated Productivity Investment Program (APIP), which has now achieved its savings target of $50m… As we enter the second half, while we do not anticipate any meaningful improvement in market conditions, we continue to see growth opportunities in verticals and geographies favoured by increased public and private investment, enabled by our unmatched global presence and end-user focused sales approach. Based on this outlook, we are maintaining our guidance range for FY26 Adjusted EPS of US137¢ to US149¢.

What’s next for Ansell?

Looking ahead, Ansell expects organic constant currency sales growth in the second half, with market conditions likely to remain steady. The company is maintaining its FY26 adjusted EPS guidance between US137¢ and US149¢ and plans further investment in manufacturing and IT systems to support future growth.

Earnings momentum from the first half is expected to continue, backed by ongoing productivity improvements, KBU synergies, and a strong balance sheet. The company highlighted its focus on seizing growth opportunities in key global markets while delivering shareholder returns through dividends and buybacks.

Ansell share price snapshot

Over the past 12 months, Ansell hares have declined 13%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.

View Original Announcement

The post Ansell shares: earnings jump and dividend rises in FY26 half-year appeared first on The Motley Fool Australia.

More reading

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• Freightways Group lifts profit and dividend in HY26 results
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• The a2 Milk Company impresses with 1H26 earnings—shares in focus

Motley Fool contributor Laura Stewart has positions in Ansell. 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 Ansell. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

Owning ANZ Group Holdings Ltd (ASX: ANZ) shares has historically been a rewarding experience in terms of passive income and the dividend yield. Investors may be wondering if that record will continue in the coming years.

The ASX bank share impressed the market with its FY26 first quarter update, which included cash net profit of 17% compared to the quarterly average of the second half of FY25, excluding significant items. Operating expenses declined by 8%, while operating revenue grew 1%.

Including significant items, the cash net profit jumped an impressive 75%, with operating expenses lower by 21%.

Net loans and advances grew to $837 billion at December 2025, up 1% from September 2025 and up just 0.3% from December 2024.

After taking those numbers into account, analysts have revealed where they think the dividend yield is headed for owners of ANZ shares.

FY26

UBS noted that cash profit and costs were better than analysts were expecting, both from UBS and other market analysts. The credit environment is still “very benign”

The broker said that this is “clearly a good start to FY26”, along with operational deposit growth of 5% year-over-year, as well as a solid net interest margin (NIM).

UBS also noted some negatives:

…however, more immediately NZ and US rate cuts, relevant for the Institutional division, could be a headwind. Things we would call out that could be negatives are NII [net interest income] grew by only 0.4%, and lending only grew 1% QoQ or 0.3% including Institutional. Revenue growth (+3.0%) supported by Non-II [non-interest income] and markets income in this result. Key to ANZ achieving its targets is the ability of the group to hold onto revenue as it goes through this period of restructuring and reset.

Based on UBS’ forecasts, owners of ANZ shares could see a dividend yield (excluding franking credits) of 4.2%.

FY27

In the 2027 financial year, UBS is projecting a similar payout from ANZ, resulting in a dividend yield of 4.2% (excluding franking credits).

FY28

The ASX bank share’s payout is expected to jump in the 2028 financial year. UBS projects that owners of ANZ shares could receive a dividend yield of 4.5%, excluding franking credits.

FY29

The ANZ dividend per share could rise again in the 2029 financial year. This could mean the FY29 dividend yield for shareholders is 4.6%, excluding franking credits.

FY30

In the last year of this series of projections, ANZ is forecast by UBS to increase its payout again to a dividend yield of 4.7%, excluding franking credits.

UBS explained its negative view on the business:

We remain Sell-rated on ANZ with a price target of $36.5/share (was $35/share), as we think the stock has run ahead of fundamentals, with a particularly strong positive price reaction to this 1Q26 earnings update (~+10%). We remain cautious on ANZ’s strategy to reset profitability. ANZ is trading at 15.8x P/E (2-years forward)…

The post Here’s the dividend yield forecast out to 2030 for ANZ shares appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Tristan Harrison 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.

The a2 Milk Company Ltd (ASX: A2M) share price is in focus today after the company posted an 18.8% jump in revenue to $993.5 million and lifted its FY26 guidance.

What did The a2 Milk Company report?

• Revenue up 18.8% to $993.5 million
• EBITDA up 18.4% to $155.0 million; underlying EBITDA up 25.9%
• Net profit after tax (NPAT) up 9.4% to $112.1 million
• Basic EPS up 9.2% to 15.5 cents; underlying EPS up 19.4% to 16.9 cents
• Closing cash of $896.9 million with 90.8% operating cash conversion
• Interim dividend of 11.5 cents per share (unimputed, fully franked, ~74% NPAT payout)

What else do investors need to know?

The a2 Milk Company saw strong gains across key segments, with China & Other Asia revenue rising 20.3%, ANZ up 8.6%, and the USA surging 29%. Its English label infant milk formula performed especially well, jumping 20.9%, while China label sales hit a record market share.

The company recently expanded its range of kids and seniors nutritionals, and entered the paediatric supplement category, opening fresh growth avenues. Recent supply chain moves—including the completion of its a2 Pokeno acquisition and a divestment of Mataura Valley Milk—aim to support a higher-growth, lower-risk business.

What did The a2 Milk Company management say?

David Bortolussi, Managing Director and CEO, said:

Our upgraded outlook means we are now on track to achieve our $2 billion medium term sales ambition in FY26, a full year ahead of plan. This is testament to the execution of our team and the strength of the a2 brand.

What’s next for The a2 Milk Company?

Looking ahead, the company has lifted its FY26 revenue growth guidance from low to mid double-digit percent, alongside expectations for improved EBITDA margins. Management is focusing on growing its infant formula, adjacent nutrition categories, and expanding in international markets.

With innovation such as new fortified UHT kids’ products and China label paediatric supplements, a2 Milk aims to capture more market share and diversify. The supply chain projects and brand investments are expected to underpin higher profitability and reduce risk further.

The a2 Milk Company share price snapshot

Over the past 12 months, the a2 Milk Company share price has risen 20%, outperforming the S&P/ASX 200 Index (ASX: XJO) which has climbed 4% over the same period.

View Original Announcement

The post The a2 Milk Company impresses with 1H26 earnings—shares in focus appeared first on The Motley Fool Australia.

More reading

• GPT Group delivers strong 2025 profit and distribution uplift
• BlueScope Steel books strong 1H FY26 profit and dividend surge
• Freightways Group lifts profit and dividend in HY26 results
• Contact Energy offers $47m for full King Country Energy ownership
• Ansell shares: earnings jump and dividend rises in FY26 half-year

Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

James Hardie Industries plc (ASX: JHX) shares have experienced sharp swings over the past year.

At one point, the stock fell roughly 40% to 50% from its high amid concerns over a large US acquisition, softer earnings, and governance uncertainty. In the first weeks of 2026, James Hardie shares have staged a meaningful recovery and gained 18% in value to $36.54, at the time of writing.

Let’s have a look why experts think there’s more to come from the ASX share.

Market leadership and pricing power

James Hardie is the dominant fibre cement player in North America and Australia. Its brand recognition, distribution network, and product durability create a competitive moat that is difficult for rivals to replicate.

The leadership position of James Hardie shares have historically allowed the company to push through price increases, even in mixed demand environments. The addition of outdoor living products through its US expansion broadens James Hardie’s addressable market and provides cross-selling opportunities.

Over time, management believes scale benefits and cost synergies can lift margins and support earnings growth.

Better than expected profit

Last week James Hardie released a third-quarter profit that exceeded expectations. The building products maker said in a statement to the ASX that its net sales rose 30% to US$1.2 billion, while operating income was US$176 million. The net sales figure was, however, inflated by the contribution of AZEK, which James Hardie bought mid-last year.

The company upgraded its full-year adjusted EBITDA guidance from US$1.2 to US$1.25 billion to US$1.23 to US$1.26 billion. It also upgraded the net sales outlook for both the siding and trim, and deck, rail & accessories divisions.

Cyclicality and execution risk

The flip side of the US presence is exposure to the housing cycle there. New construction, repairs and remodel activity are highly sensitive to mortgage rates and consumer confidence. Elevated interest rates have dampened housing demand, and volumes have been uneven across regions.

Valuation is another consideration. After rebounding, James Hardie shares are no longer priced for disaster. That means future gains will likely depend on earnings delivery rather than sentiment alone.

What do brokers see next?

Analyst views on James Hardie shares generally sit in the moderate buy to outperform range, with many price targets above recent trading levels. Forecasts point to gradual earnings improvement as cost savings flow through and housing markets stabilise.

The consensus expectation is not for explosive short-term growth, but for steady gains if management executes well and demand conditions normalise. Analysts have set the average 12-month price target for James Hardie shares at $41.77, a potential gain of 14% at current levels.

Morgans is feeling positive about the medium-term outlook of James Hardie shares. As a result, the broker has retained its buy rating with an improved price target of $45.75, a potential 25% upside. 

Foolish takeaway

James Hardie shares are not a straight-line growth story. They are cyclical, exposed to macro conditions. But the company also holds strong market positions, proven pricing power, and expansion opportunities in attractive categories.

If housing conditions improve and synergies are realised, the shares could continue trending higher. Investors should expect volatility, but long-term believers may see the recent swings as part of the journey rather than the end of the story.

The post Why James Hardie shares could keep charging higher appeared first on The Motley Fool Australia.

More reading

• These ASX 200 shares could rise 25% to 65%
• 3 ASX 200 stocks smashing the benchmark this week
• Buy, hold, sell: James Hardie, CSL, and CBA shares
• Here are the top 10 ASX 200 shares today
• Why AGL, CBA, Domino’s, and James Hardie shares are jumping today

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 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.

REA Group Ltd (ASX: REA) shares have slid 41% over the past 12 months, even as the engine underneath keeps humming.

At current levels, this beaten-down ASX share looks mispriced. For investors prepared to ride out short-term volatility and tune out broader market noise, REA Group shares could offer compelling long-term upside.

Let’s have a look at the reasons why.

Dominant digital marketplace

REA Group is the owner of realestate.com.au — Australia’s dominant online property marketplace. In digital real estate, scale wins. REA Group has it.

The business throws off strong cash flow and has long demonstrated pricing power. Agents pay for depth products, premium listings and data insights because that’s where the eyeballs are. Even in softer listing markets, REA Group has historically lifted yield per listing to keep revenue moving higher.

Pricing and product mix drive growth

Recent quarterly numbers told the same story: revenue and EBITDA up, driven more by pricing and product mix than sheer volume. That’s the mark of a quality platform. The moat of the REA Group shares is clear — market leadership, network effects and recurring agent services.

REA Group recently reported its results for the six months to 31 December 2025. With its core operations, it reported revenue growth of 5% to $916 million, underlying operating profit excluding associates growth of 6% to $569 million, and net profit growth of 9% to $341 million.

Regulatory scrutiny and elevated multiples

But REA Group shares are not risk-free. Regulatory scrutiny is a live issue, and the stock still trades on elevated multiples compared to long-term averages. That can limit short-term upside if growth wobbles.

Still, leverage to a housing recovery remains powerful. If listings rebound or management successfully rolls out AI-driven tools that deepen agent engagement, sentiment could shift quickly.

Pullback as opportunity

For long-term investors, a 41% pullback in a category leader doesn’t automatically signal trouble. It can signal opportunity. Most brokers seem to think so.

Following the half-year results, Bell Potter has maintained its buy rating on REA Group shares but trimmed its price target to $211.00 from $244.00. With the shares currently trading at $158.09, that implies potential upside of around 33% over the next 12 months.

The business is also rated as a buy by UBS, with a price target of $218.90. This points to a possible rise of around 38% within the next year from where it is at the time of writing.

UBS recently explained that REA Group shares seem cheap compared to its valuation multiples of the last five years:            

We reiterate our Buy rating on REA. Whilst difficult to know where the valuation support would be in the current market environment, REA is trading today on 18.5x fwd EBITDA, 31x fwd P/E both more than 1SD below last 5yr averages, which we view as attractive for a stock continuing to deliver resilient double digit earnings growth, and most AI defensive across our Online Classifieds coverage.

The post 3 tailwinds that could send REA Group shares higher again 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 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.