Orica (ASX: ORI) Shares Dip Despite Positive Outlook from Morgan Stanley

May 13, 2024 04:46 PM AEST | By Team Kalkine Media

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Orica (ASX: ORI) Shares Dip Despite Positive Outlook from Morgan Stanley — Image source: Pixabay.com

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Orica Limited (ASX: ORI) experienced a slight decline of 0.49% on Monday to trade at AU$18.21 apiece, despite receiving an optimistic forecast from investment firm Morgan Stanley regarding its earnings growth over the next three years. This dip follows a period of heavy maintenance shutdown and the announcement of positive first-half results for 2024.

During the first half of 2024, Orica reported a robust earnings before interest and taxes (EBIT) of AU$353.7 million ($233.4 million), marking a notable 10% increase compared to the same period last year. Morgan Stanley expressed satisfaction with these results, stating that the EBIT exceeded their initial estimates by 9%.

In light of Orica's strong performance, Morgan Stanley raised its price target (PT) for the company from AU$19 to AU$21.50 while retaining an "overweight" rating. The brokerage firm foresees further growth, projecting an 18% increase in EBIT and a 5% increase in net profit after tax (NPAT) for the fiscal year 2025.

Analysts across the board have shown confidence in Orica, with the average rating on the stock being "buy," according to data from the London Stock Exchange Group (LSEG). The median price target for Orica shares stands at AU$20.26, reflecting an optimistic outlook for the company's future performance.

Despite the positive sentiment from Morgan Stanley and the broader analyst community, Orica's shares have faced some volatility. Year-to-date, the stock has seen a 14.8% increase in value, indicating investor interest in the company's potential. However, the recent dip in share price suggests some caution among investors, possibly influenced by broader market factors or short-term fluctuations.

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