Research notes

Continuing the trend during major bank’s reporting season, CBA's trading update showed flat 1Q27 earnings, with growth tracking below 1H27 expectations. Markets revenue weakness and higher credit losses were the key headwinds. >Forecast downgrades of 0-5% across FY27-29F. Target price $119.27/sh (-1%). >SELL retained, given potential TSR of c.-26% at current prices. Valuation remains stretched given the growth outlook and required risk-adjusted returns.

As expected, FDC upgraded FY27 revenue and EBIT guidance by 5-10%. We upgrade our forecasts to the top end of guidance and move to a BUY recommendation. Work in hand has grown 14% since the FY26 result to $2.85b and remains well spread across sectors. We see this as an attractive opportunity to enter a business that should be a steady earnings compounder with an attractive dividend yield (6.1%).

FLT’s initial FY27 NPBT guidance is in line with our previous forecast and consensus. The A$307.5m midpoint implies 11% growth on FY26. However, the 2H skew is larger than expected with ~31%/69% 1H/2H, implying a weak 1H27 followed by strong growth in the 2H27 (cycling a weak 4Q26). >Leisure continued its strong start to the year following the Middle East disruption in the 4Q26, while Corporate’s 1H27 is weaker given the timing of new wins, costs moving above the line and investment, before returning to growth in the 2H27. >We have downgraded our FY27-29 NPBT forecasts by ~4% and move to the bottom end of FLT’s guidance range. Given recent share price appreciation, we lower our recommendation to ACCUMULATE with a new price target of A$13.91.

ADH reported group sales for the first 19 weeks of FY27 down (0.6)%, an improvement from the (4.5)% decline in the first 8 weeks. However, sales in the last 6 weeks (2Q to date) have softened to (1.5)% decline, reflecting a more challenging consumer environment. >Group gross margins are ahead of the pcp, with Adairs and Mocka up year-on-year, offsetting a 300-400bps decline in Focus. >We have lowered our EBIT by 9%/5% in FY27/28 largely driven by weaker gross margins in Focus. Our target price lowers to $1.70 (from $1.80). BUY maintained.

PEXA’s 1Q27 update cut FY27 guidance on weaker property volumes: revenue to A$355–380m (~8% lower at the midpoint) and Core NPAT to –A$6m to +A$6m (from A$5–20m). 1Q27 Exchange volumes fell ~11%, with transfers down 15%, and October transfers were down 26%. The next catalyst is IPART’s final report (due by 18 November), which will show whether the draft’s proposed price cuts, worth ~A$70m (~20%) of year-one revenue, go ahead. >Overall this is a softer update than expected, albeit one driven by a difficult property market backdrop. >We downgrade our PXA FY27F/FY28F EPS by -20%/-13% on softer volume forecasts and reduced margin assumptions. Our target price is set at A$7.03 (previously A$7.12), with our earnings changes offset by a valuation roll-forward. HOLD maintained.

McDonald’s Corporation (MCD.NYS) is a global QSR (Quick Service Restaurant) business known for signature menu items such as the Big Mac, Quarter Pounder, Chicken McNuggets, and Fries. The Golden Arches logo is one of the most instantly recognisable symbols of American consumer culture in the world.

PWH has identified the aircraft maintenance, repair and overhaul (MRO) market as a long-term growth opportunity. Management noted that the MRO opportunity over an aircraft's operating life can significantly exceed the initial manufacturing opportunity, reflecting recurring maintenance, repair and overhaul requirements over a typical 20-30 year service life. >Given MRO work is generally more repeatable and scalable, this creates an opportunity for PWH to improve production efficiency (particularly during non-peak periods) and improve margins over time. >Although revenue has not been disclosed, management noted that MRO revenue grew 356% in FY26 off a low base, implying current revenue is likely still in the single-digit millions. With 12 parts currently in production and a potential product catalogue that could eventually reach around 100 parts, we believe MRO has the potential to become a meaningful contributor to group revenue over time. >We make no changes to our earnings forecasts and $12.55 target price. ACCUMULATE rating maintained.

3Q26 revenue of US$2.49m was in line with guidance, while adjusted EBITDA loss of US$14.84m was better than our expectation. >While 40 implants were completed in 3Q26 (pre-released), with September activity half the July/August monthly average, management reports early signs of improvement following its commercial realignment. >With 40 active sites, 57 commercial contracts and 100 trained physicians, the commercial infrastructure is established, but the key remains converting this into consistent procedure volumes. >We adjust CY26-28 estimates, with our DCF-based valuation moving to A$1.15. Maintain SPECULATIVE BUY.

We initiate on Glencore (GLC) with a BUY rating and an A$11.90 per CDI TP. >We see GLC as significantly differentiated from fellow global majors BHP and RIO, and view it more as a portfolio complement. >We see potential for GLC to be included in the S&P/ASX 300 in the March 2027 quarterly rebalance. >GLC is a highly diversified business and we believe its pipeline gives the copper division scope for material growth over the next decade.

BB1 has released positive data from a study in people with a rare genetic form of autism supporting the broader use of its technology. >There are multiple catalysts coming to maintain investor interest, in or view, particularly completion of recruitment of the autism trial expected before year end. >We have made no changes to forecasts or target price (A$1.76). SPECULATIVE BUY.