Research notes

FY26 result was strong, with adjusted EPS of US148.6c (+18%) at the top end of guidance, with adjusted EBIT of US$322m (+15% organic cc) above our forecast. Importantly, 2H adjusted sales growth accelerated to 9.2%, with volumes improving providing some evidence that volume recovery is emerging. While FY27 EPS guidance of US158-170c (6-14%) looks solid, the majority of gains comes from FX and buybacks rather than operating earnings, with sustainability of Healthcare growth and Industrial margins yet to be proven. We increase FY27-28 EPS forecasts up to 5.9%, with our DCF/SOTP price target increasing to A$37.85. HOLD.

Profit growth steals the show - EBITDA increased 66% YoY to $42.8m while NPAT rose more than 2,700% YoY to $15.2m, highlighting a transformational year for earnings despite only modest revenue growth. Margins drove the result, not fleet growth - Revenue increased just 7% YoY to $209.7m, yet earnings surged as improved rig utilisation, cost discipline and margin expansion unlocked significant operating leverage. Strong platform for FY27 - MSV delivered robust cash generation, declared its second dividend for the year, and expects operating rig numbers to increase through FY27, providing a pathway for further earnings growth. We maintain an ACCUMULATE rating with an unchanged price target of A$0.60ps.

There were no major surprises in EDV’s FY26 result after the company pre-announced its key numbers (sales, underlying EBIT and underlying NPAT) in early August. However, the outlook for costs was greater than anticipated as EDV increases investment to execute its new strategy. Management noted that competition remains intense in the Retail segment, particularly in the online channel, while Hotels sales growth softened in early 1H27 across all key categories (food & beverage, gaming and accommodation). We adjust FY27/28/29F underlying EBIT by -7%/-5%/0%. Our target price decreases to $2.95 (from $3.20) and we maintain our TRIM rating. We expect FY27 to be a disruptive year as EDV implements its transformation initiatives. Liquor demand also remains under pressure from elevated interest rates, ongoing cost-of-living pressures and a subdued consumer environment. Given these headwinds and the execution risk associated with the transformation program, we believe the balance of risks remains skewed to the downside.

PLS delivered an in-line FY26 Underlying EBITDA result and surprised with a maiden 5cps fully franked final dividend (22% FCF payout). We view PLS as fairly valued at current levels, with its premium to peers already reflecting the company's best-in-class execution, balance sheet and growth optionality. Depleted lithium inventories leave scope for short-term upside, though we see the medium-term outlook as more volatile given uncertainty around supply and demand drivers. Move to a TRIM (previously HOLD) with an unchanged $4.60ps target price.

ADH reported FY26 underlying EBIT of $55.0m which was down 0.4% on the pcp and within guidance range of $53.5-55.5m. Adairs and Mocka delivered strong EBIT growth (+14.9%/ +32.1%). Focus on Furniture remains a drag with EBIT down 67.6% to $3.8m (~$2.0m loss in 2H) with management now guiding a two-year turnaround. Given the underperformance, ADH recognised a non-cash impairment charge of $63.5m ($56.7m post tax). We have made modest revisions to our underlying EBIT estimates (1%/2% in FY27/28). We see the core Adairs banner set to deliver strong growth in FY27 driven by GM improvement and cost control, along with solid growth in Mocka offsetting weakness in Focus. Given the share price weakness, we have upgraded to a BUY recommendation (from ACCUMULATE).

Johnson & Johnson is an American multinational pharmaceutical and medical technologies company head quartered in New Jersey. The company manufactures health care products and provides related services for the pharmaceutical and medical devices markets. It develops and sells prescription pharmaceuticals and medical technology worldwide.

Roche Holding AG is a Swiss multinational healthcare company that operates worldwide under two divisions: Pharmaceuticals and Diagnostics. Roche Pharma is focused on finding new medicines and diagnostics that help patients and evolve the practice of medicine. It treats ~28m people with its medicines and has 32 products on the WHO list of essential medicines. Roche Diagnostics develops diagnostics tests, instruments and digital solutions. This enables the collection of data, generating accurate and high-quality information that is used to inform clinical diseases around infections.

Pfizer is a research based pharmaceutical company that focuses on drug discovery for human diseases. It has a global portfolio including medicines and vaccines, as well as many other health care products. Its top 10 medicines and vaccines include: Comirnaty, Paxlovid, Eliquis, Prevnar, Ibrance, Vyndaqel, Xeljanz, Xtandi, Enbrel and Inlyta. The company collaborates with health care providers, governments and local communities to support and expand access to reliable, affordable health care around the world. It has key franchises in cardiovascular, infectious diseases, inflammatory conditions and vaccines.

Eli Lilly and Co is an American pharmaceutical company headquartered in Indianapolis. It engages in the discovery, development, manufacture and sale of pharmaceutical products. Its portfolio of medicine includes treatments in the areas of bone muscle joints, cancer, cardiovascular, diabetes, endocrine, immunology, neurodegeneration, neuroscience, and pain. Its products include Forteo, Adrica, BAQSIMI, Basaglar and Glucagn.

Novo Nordisk is a Danish multinational pharmaceutical company providing innovative treatment for five chronic diseases. Its products treat type 1 and 2 diabetes, obesity, haemophilia and growth disorders. It is most known for its diabetes treatments. Ozempic is its main revenue stream, which is for the treatment of adults with insufficiently controlled type 2 diabetes.