Tag: Stock pick

The Transurban Group (ASX: TCL) share price is in focus today after the company announced a comprehensive overhaul to its NSW toll enforcement process, including switching off toll notice administration fees and moving to digital notifications for unpaid tolls.

What did Transurban Group report?

• Agreement with NSW Government to digitise unpaid toll reminders via email and SMS
• Phased switch-off of paper toll notices and elimination of related administration fees from July 2026*
• Enhanced support for motorists experiencing financial hardship
• Changes tied to broader Toll Reform outcomes between concessionaires and the NSW Government
• Ongoing protection of Transurban and partner investment in Sydney’s $36 billion road network

What else do investors need to know?

Transurban, alongside its investment partners, worked closely with the NSW Government to revamp the state’s toll notice process, aiming for earlier and more direct engagement with motorists. The reforms promise not only operational efficiency—like reduced paper usage—but also improvements to the customer experience, with timely digital alerts and clearer pathways for those in financial difficulty.

The reforms’ implementation will depend on the finalisation of administrative arrangements with Transport for NSW and the conclusion of broader toll reform discussions. If all goes to plan, the digital system is expected to roll out in July 2026.

What did Transurban Group management say?

CEO Michelle Jablko said:

Digitising toll notices will result in a better customer experience and reduced operating costs. These changes are consistent with the Government’s commitment to respecting the value of existing contracts and the revenue of concessionaires and are contingent on broader toll reform outcomes.

What’s next for Transurban Group?

With the new digital enforcement process nearing implementation, Transurban is positioning itself for smoother and more efficient toll collection in NSW. Investors can expect to hear more as the company and government finalise system upgrades and the broader Toll Reform package.

For now, the transition marks the final stages towards a significant shake-up in how Sydney’s toll roads are managed. Transurban says these changes should benefit motorists, the NSW Government, and shareholders by protecting core investments and supporting simpler road use.

Transurban Group share price snapshot

Over the past 12 months, Transurban Group shares have risen 5%, slightly outperforming the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.

View Original Announcement

The post Transurban Group overhauls NSW toll enforcement, ditches paper notices appeared first on The Motley Fool Australia.

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• Iluka Resources signs multi-year rare earths supply deal
• Up 1,700% and more, what’s next for these ASX 200 shares?
• 5 things to watch on the ASX 200 on Tuesday

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 positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Transurban Group. 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.

ASX healthcare shares have tested investors’ patience in recent years.

Some former market favourites have fallen out of favour as growth expectations, margins, valuations, and sentiment have all been reassessed.

But healthcare is still one of the most attractive long-term sectors on the market.

Demand is supported by ageing populations, chronic disease, medical innovation, and the simple reality that people do not stop needing treatment when the economy slows.

Two ASX healthcare shares that could be worth buying with a long-term view are in this article.

CSL Ltd (ASX: CSL)

The first ASX healthcare share to look at is biotech giant CSL.

It has been through a difficult period, with investors becoming far more cautious on its earnings outlook and growth profile.

But it could be worth sticking with the company. CSL is a global leader in plasma therapies, with products used across areas such as immunology and haematology. It also has exposure to vaccines and iron deficiency through other parts of the group.

This gives the company a broad healthcare platform, rather than a single product or single treatment market.

The plasma business is particularly important. It requires collection centres, manufacturing expertise, regulatory approvals, scale, and deep relationships across healthcare systems. These are not easy advantages for competitors to replicate quickly.

That does not mean CSL will rebound immediately. Management still needs to restore confidence, improve execution, and prove that its earnings base can grow again. But for patient investors, this is where the opportunity may sit.

If CSL can stabilise its performance and return to sustainable earnings growth, the current period of weakness could eventually look like a major reset in a high-quality healthcare business.

ResMed Inc (ASX: RMD)

Another ASX healthcare share that could be a great long-term buy is ResMed.

It is a global leader in sleep apnoea treatment and connected respiratory care.

ResMed’s products help patients breathe better and manage sleep-related breathing disorders. This includes devices, masks, accessories, software, and digital tools that support ongoing treatment.

The long-term opportunity is significant. Sleep apnoea is significantly underdiagnosed in many markets, but awareness of sleep health continues to grow. As more people are tested and treated, demand for ResMed’s devices and consumables could continue expanding.

So, with its shares down heavily from their highs, now could be an opportune time to invest with a long term view.

Why patience is important

CSL and ResMed are very different companies, but they share some important qualities.

Both operate in global healthcare markets, both have built strong positions over many years, both provide products that address real medical needs, and both have the potential to benefit from long-term demand rather than short-term consumer trends.

The challenge is that healthcare investing often requires patience.

Earnings growth can be uneven, sentiment can change quickly, and operational setbacks can take time to fix. Investors who buy these shares need to be willing to look beyond the next result and focus on the quality of the businesses over a longer horizon.

For patient investors, that could make CSL and ResMed shares very interesting opportunities right now.

They may take time to recover, but their global market positions, healthcare exposure, and long-term demand drivers could make them great ASX shares to buy and hold for the years ahead.

The post Should I buy CSL and ResMed shares right now? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in CSL and ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. 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.

The Iluka Resources Ltd (ASX: ILU) share price is in focus after the company secured its first binding, multi-year offtake agreement for magnet rare earth oxides, promising minimum revenue of US$155 million over four years.

What did Iluka Resources report?

• Signed a binding, multi-year offtake agreement with a global automotive company
• Agreement covers supply of around 1,200 tonnes of magnet rare earth oxides (Nd, Pr, Dy, Tb) over four years
• Commences in 2028, in line with Eneabba refinery commissioning and ramp up
• Minimum revenue of US$155 million under the take-or-pay terms; potential for US$172 million if industry prices hold
• Volumes represent about 10% of Iluka’s planned rare earths output for the period

What else do investors need to know?

Iluka’s agreement sets pricing at the higher of minimum or market-linked prices for each product, boosting revenue security while keeping upside if prices rise. The contract signals early commercial confidence in Eneabba, which is now over 50% complete and scheduled for commissioning in 2027.

The deal covers both light and heavy magnet rare earth oxides and is with a ‘globally recognised automotive company’—though the customer’s name remains confidential. The company notes that talks with other potential buyers are ongoing, which could further underpin future sales.

What did Iluka Resources management say?

Managing Director Tom O’Leary said:

Iluka’s offtake agreement marks a particularly important milestone in the development of our rare earths business. Our first rare earths customer is a globally recognised automotive company and I am delighted that Iluka has been entrusted to deliver refined critical minerals as part of its supply chain. We look forward to a collaborative and successful partnership.

Beyond being Iluka’s first, the agreement is significant in that it encompasses the full suite of light and heavy magnet rare earth oxides and contains minimum prices agreed between commercial parties that are independent of those backed by governments.

One year out from commissioning, Iluka’s rare earth oxides have been procured by an end-use customer in a likeminded nation. This demonstrates increasing recognition of Iluka’s position as a credible, vertically integrated supplier, with diverse feedstock sources spanning internal operations and third-parties. Discussions with other prospective customers are ongoing.

What’s next for Iluka Resources?

With this offtake agreement in place, Iluka’s rare earths business edges closer to first production from the Eneabba refinery in 2027 and initial deliveries from 2028. Management continues to engage with more potential customers and aims to further diversify its rare earths sales.

The company is also progressing plans to ramp up production using additional feedstocks in future years, which would grow the Eneabba refinery’s capacity beyond current plans, strengthening its competitive position in critical minerals supply.

Iluka Resources share price snapshot

Over the past 12 months, Iluka Resources shares have risen 138%, outperforming the S&P/ASX 200 Index (ASX: XJO) which has risen 4% over the same period.

View Original Announcement

The post Iluka Resources signs multi-year rare earths supply deal appeared first on The Motley Fool Australia.

More reading

• Reliance Worldwide closes Australian brass sites
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• Transurban Group overhauls NSW toll enforcement, ditches paper notices
• Up 1,700% and more, what’s next for these ASX 200 shares?
• 5 things to watch on the ASX 200 on Tuesday

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.

Owning National Australia Bank Ltd (ASX: NAB) shares has usually been a very useful choice for dividends over the years. Experts think the ASX bank share could continue to deliver pleasing passive income.

As an already-huge bank, the company does not have rapid growth prospects. The ASX bank share is able to send a lot of its profit each year to investors because there are not many places for the bank to invest for a good return. This results in a relatively low price/earnings (P/E) ratio.

Therefore, the business is able to support a generous dividend payout ratio for shareholders.

So, let’s look at projections on how generous the bank may be.

FY26

We’re more than halfway through the NAB 2026 financial year, which ends in September 2026, rather than June.

The ASX bank share has already told investors about its FY26 half-year result, which saw the bank report statutory net profit of $2.75 billion and underlying cash earnings of $3.6 billion. That represents 0.1% growth year-over-year and 2.3% growth half over half.

The bank reported that its growth was driven by its business and private banking segment, which delivered 9.9% cash earnings growth to $1.85 billion, thanks to lending volume growth, broadly stable margins and improved markets and fee income.

Within that result, NAB decided to maintain its dividend per share at 85 cents. That’s understandable considering underlying cash profit moved very little.

One of the biggest problems for the ASX bank share was its credit impairment charge of $706 million, partially as a result of potential stress related to the Middle East conflict.

In terms of the potential dividend for the 2026 financial year, the forecast on Commsec suggests the ASX bank share could pay an annual payout of $1.70 in FY26. That translates into a possible grossed-up dividend yield of 6.4%, including franking credits, at the time of writing.

That’s a solid level of passive income compared to many other passive income options, in my opinion.

FY27

The next financial year could be particularly interesting for investors, considering all of the global impacts on the economy and how interest rate changes could impact profitability.

According to the forecast on Commsec, the business could deliver a slightly higher annual dividend per share of $1.72. That translates into a potential grossed-up dividend yield of 6.5%, including franking credits, at the time of writing.

The projections also suggest the bank could deliver higher earnings per share (EPS) in both FY26 and FY27. The forecasts would put the NAB share price at under 15x FY27’s estimated earnings, at the time of writing, according to Commsec.

The collation of analyst opinions on NAB shares suggests there are currently two buy ratings, five sell ratings and nine hold ratings on the business.

Therefore, there could be better opportunities out there than NAB shares.

The post Here’s the dividend forecast out to 2027 for NAB shares appeared first on The Motley Fool Australia.

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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.

Some ASX shares are forecast to deliver significant returns within the next year, so they could be great ones to look at.

Of course, an analyst’s projection is not a guarantee of returns. But, if an expert (or experts) believes the business is severely undervalued, then the company could be a market-beater.

Let’s look at two ASX shares that may materially outperform the S&P/ASX 200 Index (ASX: XJO) in the year ahead.

Resmed CDI (ASX: RMD)

Resmed is one of the world leaders when it comes to sleep apnea and CPAP (continuous positive airway pressure) machines.

According to CMC Invest, there have been nine ratings on the business within the last three months, with eight of them being a buy.

A price target is the analyst’s way of telling investors where they think the share price will trade in a year from the time of the investment call. The average price target of those nine ratings is $41.27, suggesting a possible rise of 55% over the next 12 months.

The Resmed share price has dropped 26% during 2026 to date, making it look much better value. That decline has led to the business looking much better value, despite ongoing strength of its financials.

In the FY26 third quarter, the ASX share reported revenue growth of 11% to $1.4 billion, with the gross profit margin improving 290 basis points (2.90%) to 62.2% and operating net profit growing 17% to $499.8 million.

IDP Education Ltd (ASX: IEL)

IDP Education describes itself as a global leader in international student placement and a co-owner of the world’s most popular “high-stakes” English language test, IELTS. It partners with universities and institutions across Australia, Canada, Ireland, New Zealand, the UK and the US.

According to CMC Invest, there have been five ratings on the business within the last three months, with four of those being a buy and one being a sell. The average price target is $4.12, which implies a possible rise of 61% over the next 12 months.

With how the IDP Education share price is down 55% this year, the business looks very attractive, according to analysts.

Despite the headwinds the global industry is facing, the ASX share recently announced a pleasing update.

It said it expects the FY26 adjusted operating profit (EBIT) to be approximately $122 million, with a strong yield performance and cost reduction mitigating the impact of market conditions.

IDP Education thinks its cost base can be reduced by a net $30 million in FY26, ahead of the $25 million target that was previously announced.

The ASX share also expected an on-market share buyback program of up to $50 million, which reflects its “robust balance sheet and strong cash generation”.

According to the forecast on CMC Invest, IDP Education shares are now valued at less than 12x FY26’s estimated earnings, with earnings growth forecast to rise 7% in FY27 and 27% in FY28.

The post 2 ASX shares tipped to grow 50% or more in the next 12 months appeared first on The Motley Fool Australia.

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

When an ASX share is rated as a buy, it’s interesting. When there are numerous buy ratings, that suggests there could be a compelling opportunity for investors.

While having the backing of multiple analysts does not automatically mean there will be strong returns, I think it certainly suggests to take a closer look.

Let’s consider two of the most-backed ASX shares Aussies can buy right now.

Flight Centre Travel Group Ltd (ASX: FLT)

Flight Centre is one of Australia’s largest travel agency businesses. It also has a presence internationally, as well as a corporate travel segment.

According to CMC Invest, there have been 10 ratings on the business within the last three months. Of those 10 ratings, nine of them were buys and one was a hold.

A price target can be very informative of how undervalued analysts think a business is, it says where the expert believes the share price will be trading in 12 months from the time of the investment call.

Currently, of those 10 analyst ratings, the average price target is $14.37. At the time of writing, that implies a possible rise of more than 20% over the next year.

The company recently updated its FY26 guidance amid the conflict-driven headwinds for international leisure travel.

It now expects underlying profit before tax (PBT) to be between $275 million to $295 million, this is lower than the previous guidance of between $310 million to $345 million, though the mid-point of the guidance is approximately the same as FY25’s figure.

The ASX share also announced it was launching a $200 million share buyback, which increases the value of each remaining share, by increasing earnings per share (EPS) and other per-share statistics.

Qantas Airways Ltd (ASX: QAN)

Another ASX share that is heavily rated by analysts is the ASX transport share Qantas, Australia’s leading airline.

The Middle East conflict has also been a headwind for the business, which impacted both long haul travel and increased fuel costs.

According to CMC Invest, within the last three months, there have been 11 ratings, with all of those being a buy.

The average price target on the airline is $10.94, which suggests a possible rise of 9% over the next year from where it is at the time of writing.

The latest update came from the business in mid-April where it said that fuel costs for the second half of FY26 are estimated to be between $3.1 billion to $3.3 billion.

It also noted that it continued to see strong demand for international travel to Europe as customers sought alternative routes. Qantas said it expected unit revenue growth in the second half of around 5%, with price rises helping offset the higher costs.

With fuel seemingly starting to flow out of the Strait of Hormuz again, this could help Qantas’ earnings in the medium-term and I think it bodes well for the ASX share.

The post 2 ASX shares highly recommended to buy: Experts appeared first on The Motley Fool Australia.

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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 recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Australian share market remains a great hunting ground for passive income.

While bank shares often receive plenty of attention from dividend investors, there are many other options offering attractive forecast dividend yields.

Some of these shares also provide exposure to very different parts of the economy, which can be useful for investors trying to build a more diversified income stream.

Here are three ASX dividend shares that are rated as buys by brokers and forecast to yield more than 5% in FY 2027.

APA Group (ASX: APA)

The first ASX dividend share to look at is APA Group.

APA owns energy infrastructure assets, including gas pipelines and related infrastructure that help keep energy moving across Australia.

That gives the company an important role in the economy. Its assets support households, industry, power generation, and energy security, which can make its cash flows attractive to income-focused investors.

Citi is bullish on the company. It has a buy rating and $11.10 price target on APA’s shares.

As for income, the broker expects APA to pay a dividend of 59 cents per share in FY 2027. Based on the current share price of $10.31, this represents a forward dividend yield of approximately 5.7%.

Charter Hall Long WALE REIT (ASX: CLW)

Another ASX dividend share that could be attractive for income investors is the Charter Hall Long WALE REIT.

This property trust owns a portfolio of leased assets across Australia, with a focus on long weighted average lease expiry properties.

That long-lease structure is the key part of the income story. Rather than relying heavily on short-term leasing conditions, Charter Hall Long WALE REIT is built around contracted rental income from a portfolio of tenants across different sectors.

Citi also sees value here. It has a buy rating and $4.10 price target on its shares.

The broker expects Charter Hall Long WALE REIT to pay a dividend of 25.7 cents per share in FY 2027. Based on the current share price of $3.75, this equates to a forecast yield of approximately 6.9%.

Universal Store Holdings Ltd (ASX: UNI)

A third ASX dividend share to consider is Universal Store.

It is a youth-focused fashion retailer with a portfolio of brands and stores targeting younger shoppers.

Retail shares can be cyclical, but Universal Store has built a strong position in its niche. Its store network, brand mix, and understanding of youth fashion trends give it a point of difference in a competitive market.

Morgans is positive on the company. It has a buy rating and $9.50 price target on Universal Store’s shares.

With respect to income, the broker expects the company to pay a fully franked dividend of 46 cents per share in FY 2027. Based on its current share price of $7.34, this represents a forward dividend yield of approximately 6.3%.

The post 3 buy-rated ASX dividend shares forecast to yield 5%+ in FY 2027 appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Universal Store. 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 Apa Group. The Motley Fool Australia has recommended Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When it comes to buying blue-chip ASX shares for dividend income, Metcash Ltd (ASX: MTS) is often overlooked in favour of its larger and more famous rivals. But while the likes of Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) may be more popular with ASX investors, Metcash appears to have a lot more to offer income investors right now.

Metcash may not be a household name. However, most Australians would be quite familiar with the store networks that they help manage and supply to. These most prominently include IGA and Mitre 10, but also Cellarbrations, FoodWorks, and Thirsty Camel.

This makes Metcash one of the ASX’s most prominent consumer staples stocks, which have long been favourites of dividend investors thanks to their defensive characteristics.

But let’s get into the Metcash dividend.

Do Metcash shares really yield 6% right now?

At the time of writing, Metcash is trading at $3.12 a share. At this pricing, this ASX dividend stock is trading on a trailing dividend yield of 5.76%.

That yield derives from the last two shareholder payments that Metcash has doled out. The first of those was the final dividend worth 9.5 cents per share from August last year. The second was the interim dividend, worth 8.5 cents per share, that investors bagged in January of this year.

Both dividends came with full franking credits, as is Metcash’s habit.

Metcash has also flagged that its; next final dividend, due in August this year, will be kept steady at 9.5 cents per share.

Together, the two dividends that Metcash owners have enjoyed over the past 12 months give this company that trailing yield of 5.76%. That’s significantly more than what any of its larger and more popular rivals are offering right now, so income investors may wish to take note.

It is true that no trailing dividend is a reliable indicator of what a company will pay out going forward. It only ever reflects the past, it doesn’t predict the future.

Saying that, income investors can take comfort that Metcash has already given a heads-up for its next payout. So one could argue that investors will enjoy at least some of the current dividend yield if they buy Metcash shares today.

What do the experts reckon?

Zooming out, the future is more uncertain. However, last month, my Fool colleague covered the views of an ASX broker on Metcash. As we discussed at the time, Shaw and Partners’ Jed Richards did say this:

While growth is modest, [Metcash’s] defensive characteristics and reliable income stream support a hold position. It remains well positioned to benefit from steady consumer demand.

No doubt investors will be hoping that Richards is on the money there, at least from an income perspective. But there’s no doubt that Metcash is one of the S&P/ASX 200 Index (ASX: XJO)’s most eye-catching income stocks right now.

The post Buying Metcash shares? Here’s the yield you’ll get today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Pro Medicus Ltd (ASX: PME) shares started the week on a positive note, rising 1% to $176.64. The healthcare technology stock has delivered an impressive 35% gain over the past month, though it remains down around 36% from its highs of 12 months ago.

After such a strong rebound, investors may be wondering whether it’s time to lock in profits or whether the rally still has further to run.

Why have Pro Medicus shares surged?

The recent share price strength reflects growing confidence in the company’s growth outlook and its ability to continue winning major contracts in the highly competitive healthcare technology market.

Pro Medicus develops medical imaging software used by hospitals and healthcare networks around the world. Its flagship Visage platform enables clinicians to access and analyse medical images quickly, helping improve workflow efficiency and patient outcomes.

The company’s biggest advantage is its competitive moat. Pro Medicus has built a reputation for delivering faster and more efficient imaging solutions than many rivals. Once a hospital adopts its platform, switching providers can be costly and disruptive, creating strong customer retention and annual recurring revenue opportunities.

Turning a corner

The price of Pro Medicus shares turned a corner in early June when Pro Medicus announced three significant contract wins.

These included a new seven-year, $16 million agreement with TidalHealth, a five-year $28 million contract renewal with Allegheny Health Network (AHN), and a five-year $16 million contract renewal with Ohio State University (OSU).

The announcements reinforced the market’s confidence in both the quality of Pro Medicus’ technology and its ability to retain major customers. They also highlighted the company’s growing presence in the US, which remains its most important growth market.

Valuation and competition risk

Despite its impressive track record, Pro Medicus is not without risks.

Valuation remains the most obvious concern. Even after last year’s pullback, Pro Medicus shares continue to trade on a premium multiple relative to most ASX-listed healthcare stocks. That leaves little room for disappointment.

The business is also heavily reliant on winning and renewing large contracts. While management has consistently delivered in this area, any slowdown in contract activity could weigh on investor sentiment.

Competition is another factor to watch. The medical imaging market remains attractive, and rivals continue to invest heavily in their own technology offerings.

Finally, Pro Medicus generates a significant portion of its revenue from the US. Changes in healthcare spending, hospital budgets, or economic conditions could influence future growth rates.

What do analysts think?

Many market experts believe the rally may not be over.

TradingView data shows that 12 of 15 brokers currently rate the ASX healthcare stock as a buy or strong buy. The average price target sits at $189.47, implying around 8% upside from current levels.

Macquarie is among the most optimistic. The broker has an outperform rating on Pro Medicus shares and a price target of $221 per share. If achieved, that would represent potential upside of approximately 27%.

The post Pro Medicus shares are flying 35% higher. Time to cash out? 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 recommended Pro Medicus. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Electro Optic Systems Holdings Ltd (ASX: EOS) shares have been among the strongest performers on the Australian share market over the past year.

During this time, the defence and space company’s shares have risen an incredible 293%.

Despite this incredible rise, the team at Bell Potter believes it isn’t too late to invest.

What is the broker saying about Electro Optic Systems (EOS) shares?

Bell Potter was pleased to see the company announce a major order from the UAE this month for one of its Slinger products. It said:

EOS has secured a US$124m (A$175m) Slinger counter-drone (C-UAS) order and entered a binding, conditional joint venture (JV) with Gen5, a 100% UAE-owned defence company, covering its High Energy Laser Weapon (HELW) and Remote Weapon System (RWS) franchises.

The A$175m order comprises the remote weapon system, cannon, spares, training and associated supplies. EOS understands the systems are intended to strengthen defence capability in light of ongoing regional tensions in the Middle East. Manufacturing is expected to be split between Australia and the UAE, with deliveries across 2027 and 2028; the order is subject to Gen5’s customary terms and to export approval requirements.

Another positive from the announcement was news that EOS is looking to form a joint venture with this customer. It adds:

EOS and Gen5 have entered a binding, conditional agreement to establish an incorporated JV covering the development, manufacture and distribution of EOS’s 100-150kW and 200-300kW HELW products and RWS products. The JV is expected to be based in Abu Dhabi on a 50/50 equity and profit-sharing basis, subject to relevant UAE laws and government approvals, and EOS believes it could begin contributing to results from 2027 or 2028 onwards. Under the agreement, Gen5 is obligated to contribute US$40m of equity to the JV while EOS contributes its existing IP.

Both parties will use reasonable endeavours to secure a minimum US$250m order for the 200-300kW HELW within 12 months and a minimum US$290m order for the 100-150kW HELW within nine months, and to progress a solution with UAE government agency Tawazun to grant EOS offset credit benefits. The JV will own the IP for the 200-300kW system, and its scope may be extended to include Command & Control (C2) and Space Control.

More strong returns to come

According to the note, Bell Potter has retained its buy rating on EOS shares with an improved price target of $12.50 (from $10.60).

Based on the current EOS share price of $10.26, this implies potential upside of 22% for investors over the next 12 months.

Commenting on its recommendation, Bell Potter concludes:

We retain our Buy rating and raise our TP to $12.50/sh. EOS is positioned as a market leader across many C-UAS verticals and is leveraged to increasing defence budget allocations to C-UAS technologies. The conditional JV announcement presents a clear path towards producing HELW systems at scale and is therefore a significant development. We expect further JVs to be signed over the coming years. The agreement suggests there is a strong likelihood of major HELW order intake over the next 12 months from the UAE.

The post Up 293%! Can Electro Optic Systems (EOS) shares keep rising? 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 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.