The team at Morgans has been busy updating its recommendations this week following a flurry of results releases.
Let's now take a look at two that it remains positive on and one that it thinks investors should be avoiding. Here's what it is recommending:
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Fortescue Ltd (ASX: FMG)
This iron ore giant may have delivered a "healthy" result in FY 2025, but that wasn't enough for Morgans to stop it from downgrading its shares.
The broker believes that its valuation is stretched and has downgraded its shares to a trim rating with a $19.00 price target. It said:
Healthy FY25 result, although dividend payout now constrained despite strong hematite margins. Iron Bridge contribution still modest and costly, with realisation risk persisting at 84%. Underlying EBITDA beat consensus +2%, while NPAT was -3%. At ~A$19/share, valuation stretched, leaving limited upside without either higher iron ore prices or a pivot in strategy. We downgrade to TRIM.
Nanosonics Ltd (ASX: NAN)
Morgans was pleased with the infection prevention company's FY 2025 results, highlighting that they were stronger than expected.
And with the Trophon business continuing to perform positively and showing signs of operating leverage, the broker sees lots of value on offer with its shares. As a result, it has retained its buy rating and $5.50 price target on them. It said:
FY25 result was a beat to expectations, supported by strong consumables growth and capital sales growth. Key short-term focus remains installed base growth which beat our pass-mark (>2k units), and early signs of upgrade cycle acceleration across the ageing fleet in North America.
Commentary around CORIS launch remains positive and potentially conservative, with phased commercial rollout expected now in FY27 followed by broader adoption in FY28. Timing hinges on FDA 510(k) approvals which we have seen recent evidence of backlog and delays to approvals. However, we view CORIS timing arbitrary over the life-cycle of the device and particularly so with the Trophon business humming along and showing strong operating leverage. No change to positive view or valuation. Target price of A$5.50 remains.
Tyro Payments Ltd (ASX: TYR)
Another ASX share that gets the seal of approval following its results release is payments company Tyro.
While its results were slightly softer than expected, it still believes it was a "solid" outcome. Particularly given its margin improvements.
As a result, the broker has retained its buy rating with an improved price target of $1.67. It said:
TYR's FY25 result was slightly below consensus expectations (-1%-2%) at revenue (A$486m) and EBITDA (A$61.5m), but more in line at NPAT (A$17.6m). We saw this as a solid result overall, with continuing EBITDA margin improvement arguably the key positive highlight.
We lift our normalised PBT forecasts by +15%/+5% over the next two years, mainly on higher EBITDA margin assumptions. We note our EPS forecasts are +15%/-26% over the same timeframe, with our FY27 forecast impacted by TYR beginning to pay tax (which is slightly earlier than we thought). Our price target rises to A$1.67 (from A$1.55). With ~40% upside to our price target (A$1.67), we maintain a BUY rating.
