As the dust settles on this year's earnings results, brokers are releasing updated analysis on ASX companies. One that has received fresh guidance from Macquarie is G8 Education Ltd (ASX: GEM).
The company operates more than 430 childcare centres in Australia, with a portfolio of 21 brands. It is among the larger for-profit operators in the early education and childcare sector.
G8 Education shares have endured a tough last 12 months, falling more than 37% in that span. This includes a daily drop of 6.5% following its CY25 Half Year results last week.
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What did G8 Education report?
The company reported on August 26th for CY25 Half Year:
- Statutory NPAT of $22.5 million up 12.4% on the prior corresponding period (pcp)
- Operating EBIT up 2.8% on pcp to $40.5 million
- Occupancy for the half was lower than pcp.
- 3.5% decline in revenue to $464.7 million after its occupancy levels fell from 68.2% to 64.5%
Commenting on the results, the company said it has been a challenging operating environment and recent regulatory uncertainty, with softer occupancy levels compared to the prior corresponding period.
What does Macquarie expect
Despite falling 37% in the last year, Macquarie remains neutral on G8 Education shares.
Macquarie has cut its earnings forecasts, lowering CY25, CY26, and CY27 EPS estimates by 2.7%, 3.3%, and 5.2%, respectively. These changes mainly reflect lower projected occupancy (down 3% across all years) and minor adjustments to depreciation, amortisation, and EBIT margins.
1H25 average occupancy of 64.5% was down -3.7% YoY and has further deteriorated into 2H25, with YTD occupancy of 65% down -4.1%. The monthly occupancy curve shape should track seasonal trends in CY25; however, we don't expect the current gap to CY24 will close.
Updated price target for G8 Education shares
According to the recent report from Macquarie, the broker has lowered its price target for G8 Education shares by 22% to $0.90 (from $1.15).
It has also reduced its valuation multiple range to 10–14x (previously 12–15x).
Given current challenges, G8 Education is now being valued at the bottom of that range with an additional 20% discount, effectively valuing the company at 8x forward earnings.
Based on the G8 Education share closing price of $0.84 on Monday, the updated price target from Macquarie indicates an upside of 7.1%.
