Mining services company Orica Ltd (ASX: ORI) says the positive momentum that underpinned a strong first-half result has continued into the second half, winning plaudits from analysts at Macquarie Group Ltd (ASX: MQG).
They have an outperform rating on Orica, publishing a research note with the title, "Pretty good update where it matters''.
In its business update, Orica told the market that earnings from all three of its segments were expected to be higher than in the previous corresponding period.
The core blasting solutions division "continues to perform strongly, supported by the ongoing adoption of Orica's value-adding products and services and technology-driven blasting solutions across all regions, partly offset by lower volumes in Indonesia and the US due to reduced demand for thermal coal''.
The digital solutions division was experiencing strong recurring revenue and also benefiting from increased exploration activity, particularly in gold and copper. The specialty mining chemicals division was driving earnings growth through strong manufacturing performance and new contract awards in cyanide and emulsifiers.
Orica managing director Sanjeev Gandhi said the company was pleased with the strong finish to the financial year.
The positive momentum from the first half of 2025 has continued into the second half, with all three segments demonstrating profitable growth. Our core blasting business remains resilient, supported by the ongoing adoption of our innovative products and services, Digital Solution continues to expand its scale, and Specialty Mining Chemicals has delivered robust earnings despite the extended safety maintenance activities this year at the Winnemucca plant, which are now completed.
Macquarie is tipping a total shareholder return of 11.1% for Orica stock over 12 months, with a price target of $22.71, up from $21.48, compared with the current price of $21.07.
Orica stock has already increased from as low as $14.88 over the past year.
Macquarie analysts said while the trading update was "mixed", it was solid at the core. They called out the digital and specialty chemicals divisions as performing particularly well.
Macquarie is forecasting total dividends per share of 57.8 cents in 2025, up from 47 cents last year, and increasing to 62.9 cents in 2026.
