Inghams Group Ltd (ASX: ING) shares tumbled late last week on earnings results.
The company, the largest vertically integrated poultry producer in Australia and New Zealand, reported:
- EBITDA of $392.2 million, down 15.3% from FY 2024
- Net profit after tax (NPAT) of $89.8 million, down 10.2%
- Final fully franked dividend of 8.0 cents per share, in line with last year's final dividend
It seems investors weren't impressed with these results, as Inghams shares have fallen more than 20% since last Thursday.
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What did Macquarie have to say?
Broker Macquarie released a report on August 22 analysing the outlook for Inghams shares.
The broker said the company faces ongoing competitive pressures and an oversupplied Australian market, leading to softer selling prices and a challenging FY26, especially with a major competitor adding capacity in April 2026.
While consumer sentiment is bottoming and chicken's discount to red meat could boost volumes, cost pressures and a cautious EBITDA outlook for FY26, combined with elevated capex and rising leverage risks, limit near-term upside and keep Macquarie's rating at neutral.
The deterioration in selling prices due to market oversupply in 4Q25, and EBITDA guidance for a 2H skew (MQe 41:59) drive our caution.
We await a turnaround in the wholesale market, as an indicator of pricing stability, and in turn greater comfort on earnings certainty
Outlook
The broker has a neutral rating and updated price target of $2.70 on Inghams shares.
Macquarie said this target price is down 27%. This has been driven mostly by lower earnings forecasts (earnings revisions).
Target price down 27%, driven mainly by earnings revisions, and partly due to a 1 std. dev. discount to our P/E multiple valuation to reflect heightened earnings risk in FY26.
Based on yesterday's closing price of $2.75 per share, Macquarie's target suggests Inghams shares are trading close to fair value.
Macquarie notes that Inghams' FY26 underlying EBITDA guidance of $215m to $230m is 7% to 13% below prior expectations, with earnings heavily weighted to 2H26 due to a weak FY25 exit and delayed benefits from an operational reset.
Management is targeting $60m to $80m in annualised cost reductions, which will pressure 1H26 results but support stronger performance in the second half.
