Research notes

Ahead of MSV's FY26 result in August, we have revised our forecasts to reflect a stronger-than-expected operating performance through the year. We marginally increase our EBITDA estimates for FY26 (~2%), with higher increases for FY27 and beyond underpinned by higher average operating rig assumptions. On the balance sheet, we reduce our assumed debt drawdown and accelerate the repayment timeline from five years to three, reflecting the company's improved cash generation capacity. Taken together, these changes support an upgrade in our recommendation to SPECULATIVE BUY (from ACCUMULATE) and we increase our price target to A$0.60ps (from A$0.55ps).

FDA has approved the CAP24 surgical paddle lead, allowing US commercialisation. We view the approval as a key milestone and strategically important, as it not only expands the addressable market, but also enhances the productivity potential of SLD’s commercial platform by broadening procedural coverage within existing accounts rather than requiring a materially larger salesforce. While management expects only a gradual revenue contribution following a phased launch beginning in 2HCY26, we believe the approval enhances the longer-term growth profile of the business and further improves the scalability of its commercial platform. We make no changes to forecasts or our A$2.94 DCF-derived target price. SPECULATIVE BUY maintained.

Sizeable (but short-term) catalysts have seen AEL materially de-rate to a level we view as unsustainable given the company’s forward earnings profile. The combination of disappointing exploration results and softer spot gas prices has seen our valuation decline 17%, against a share price that has weakened 57% since AEL’s February high. ECSP Phase 1 (A$240-270m AEL share) has been de-risked by its Artisan acquisition, which was always a logical acquisition. Additional well results could still be meaningful catalysts, but are no longer a risk to AEL’s growth profile, giving us long-term conviction that value is on offer. AEL is trading at a deep discount to its chunky (and de-risked) earnings platform. We maintain a Buy rating with an A$3.00 target price.

ACAD (NEU’s marketing partner) has received a positive opinion from the European committee which recommends medicines. The market view was the resubmission of the data (previously received a negative opinion) to the Committee was unlikely to receive a positive opinion. Although marketing authorisation (approval) is not guaranteed, now it is highly likely. The share price has rallied ~30% on this news. Next catalyst is the ACAD 2Q26 report expected mid-August where the market expects continued solid sales momentum. The consensus target price is A$23.74.

The last 30 days have been the toughest part of the rollercoaster, with KAR’s share price -36% on an initial Middle East peace agreement and guidance downgrade. The start to 2026 was always going to be a tough period for KAR: a) heavy H1 investment spend, b) key Bauna well restart (SPS-92) and c) conflict uncertainty. Now at the end of H1, the first two of those three factors have been resolved, with KAR moving back into positive FCF generation with most of its 2026 capex now sunk. KAR also announced the next phase of its on-market buyback starting in July 2026. We upgrade our rating to BUY (from Hold) with a A$1.77 target price (was A$1.67).

Coverage of Turaco Gold transferred to resources analyst, Flynn Tyson. TCG has delivered a PFS for Afema, outlining a ~200kozpa open pit gold operation with a +10-year mine life. The study confirms robust economics, including a post-tax NPV5 of US$2.1bn (@ US$3,500/oz) and a maiden Ore Reserve of 1.91Moz, representing a de-risking milestone for the project. While the PFS reinforces our conviction in Afema, following the transition of coverage, we have updated our forecasts to reflect the study outcomes and revised our valuation methodology. Accordingly, we revise our recommendation to SPECULATIVE BUY (from BUY) and reduce our target price to A$1.18/share (from A$2.19/share).

SVR has over the last two quarters seen a step change in Australian originations and book growth momentum, with Bennji volumes starting to make an increasingly meaningful contribution. This return to book growth bodes well for SVR’s revenue outlook into FY27+, as Australian growth offsets the roll-off of revenues in NZ. Looking to FY27, we reset our earnings expectations to reflect: 1) recent rate rises impacting funding rates; 2) a lift in operating costs associated with rising Bennji originations; and 3) the sale of SVR’s NZ arrears, which is a one-off pull-forward of provisioning benefits into FY26 that will not be replicated in future periods. As SVR leans further into commercial lending and reinvests into book growth, we now expect the group to deliver normalised NPAT of $36m/$30m/$32m in FY26–28, respectively. Our changes result in a revised PT of $1.65/sh (previously $2.00).

JDO downgraded its FY26 PBT guidance by c.8% at the mid-point. Even more disappointing was first-time FY27 PBT guidance which was c.16% below expectations at the mid-point. The share price drawdown was vicious (particularly considering the decline that had already occurred since February). While the earnings growth outlook has moderated, we still forecast c.30% EPS growth across both FY26 and FY27 with the stock now trading on a c.6.8x PER (FY27F) and 0.6x P:BV (end-FY26). A significant risk premium or probability of failure has been priced into the stock. BUY.

BBN reported a weaker than expected trading update, downgrading its pro-forma NPAT by ~11% at the midpoint of guidance. The downgrade was driven by softer sales, particularly in the 4Q, and increased supply chain costs. Our price target lowers to $1.70 (from $1.79), and we maintain our ACCUMULATE rating. Despite a softer consumer environment, we see the strength of the refurbished store program likely to underpin earnings growth in FY27. Trading at <9x PE, we see the current price as a compelling entry point to accumulate.

Hot-on-the-heels of the Maxim acquisition announced earlier this month, TEA has entered into an agreement to acquire JPS Group, a specialist integrated services provider to energy sector, for $50m upfront (5x FY26 EBIT) or up to $75 million inclusive of all earn-outs (7.5x FY26 EBIT or just 6.2x $12m maintainable EBIT). This adds scale and an important growth lever to the underperforming Mechanical division, with JPS expected to double revenue by FY29. For the base business, FY26 guidance of $117m EBIT and $72.5m NPAT has been reiterated. We increase our EPS forecasts by +5-6% in FY27 and FY28. Our target price rises in line with our earnings forecasts to $9.80 (from $9.15).