AUS
NZ
UK
CA
USA
IND
_06_25_2026_03_53_23_801064.jpg)
Macquarie has raised the price target for Elders Ltd (ASX: ELD) from AU$8.25 to AU$8.35, citing an expected recovery in earnings during the second half of FY24. Despite a challenging first quarter, the agribusiness firm has shown signs of improved profitability in the second quarter, prompting the brokerage to revise its outlook.
Earnings Recovery Expected in H2 FY24
Macquarie's analysis reveals that Elders' underlying net profit after tax (NPAT) for the first half of FY24 was AU$14 million, falling short of the estimated AU$22 million. The shortfall was primarily due to a difficult first quarter. However, the firm has witnessed a turnaround in the second quarter, which has bolstered Macquarie's confidence in Elders' ability to recover in the latter half of the fiscal year.
The brokerage highlighted several key drivers that are expected to support this recovery. These include anticipated improvements in retail earnings and the stabilization of gross margins. Macquarie emphasized that a strong performance in the second half of FY24 is crucial for setting the stage for significant earnings growth in FY25.
Key Drivers for Recovery
Macquarie outlined the following factors as pivotal for Elders' recovery:
- Retail Earnings Improvement: The brokerage expects a boost in retail earnings, driven by better market conditions and strategic initiatives undertaken by Elders.
- Gross Margin Stabilization: Stabilizing gross margins are seen as a critical factor in enhancing overall profitability. Efforts to control costs and optimize operations are expected to contribute to this stabilization.
- Operational Efficiency: Continued focus on operational efficiency and cost management is anticipated to support the earnings recovery.
Outlook for FY25
While Macquarie is optimistic about Elders' potential for strong earnings growth in FY25, it stressed the importance of delivering a robust second half in FY24. "Strong potential earnings growth in FY25, however, 2H24 needs to be delivered first," Macquarie stated, indicating that the foundation for future growth must be solidified in the coming months.
Market Reaction and Stock Performance
The market has reacted positively to Macquarie's revised price target and optimistic outlook. As of the last close, Elders' stock has risen by 10.2% year-to-date. This upward trend reflects investor confidence in the company's ability to overcome the challenges faced in the first half of the fiscal year and achieve the projected earnings recovery.
Elders, a key player in the agribusiness sector, has faced headwinds in the early part of FY24. However, the company's efforts to improve profitability and stabilize margins have begun to yield results, positioning it for a stronger performance in the second half of the year. Macquarie's revised price target and positive outlook underscore the potential for significant growth in the near future.
As Elders continues to navigate the complexities of the agribusiness landscape, the company's focus on operational efficiency and strategic initiatives will be crucial in driving its recovery and long-term growth.
