Goodman Group (ASX: GMG) shares have been in focus this week after the industrial property giant released its quarterly update.
The team at Macquarie Group Ltd (ASX: MQG) has been busy running the rule over the update and has given its verdict on its shares.
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What is the broker saying?
Macquarie was pleased with Goodman's performance during the three months and particularly its work in progress (WIP) outlook. It said:
WIP to increase c. 17% by Jun-26 to >$17.5bn. Data centres c. $13.0bn or 497MW by Jun-26. The production rate is expected to accelerate to c. $7-8bn by Jun-26. The majority of incremental data centre WIP is expected to be fully-fitted. Target yields remain 8-9% for powered shell and 9-10% for fully-fitted. GMG are building a "capability to provide operated facilities where required" albeit this is closer to facilities management with no co-location operating intentions at this stage.
It also notes that management has reaffirmed its guidance for FY 2026. The good news for investors is that the broker believes there is potential for an earnings beat. It said:
GMG reaffirmed FY26 OEPS growth guidance of +9% y-y (MRE: +9.6%; VA consensus: +10.5%). We were not expecting an upgrade to guidance at the 1Q26 update given the group has only upgraded once at its 1Q result over the past 10 years, in FY22.
GMG has a track record of beating its original earnings growth guidance throughout the year. Over the past 10 years (excluding FY22, which was an outlier), the group has upgraded its initial guidance by an average of ~2.3ppts through the year. In FY25, GMG originally provided operating EPS growth guidance of 9% y-y, with GMG delivering 9.8% at the FY25 result. We forecast FY26 OEPSg of +9.6% (VA consensus: +10.5%) and continue to expect GMG to raise its guidance over the course of FY26.
Upgraded to outperform
In light of this solid update and recent share price weakness, Macquarie has upgraded Goodman's shares to an outperform rating with a $34.73 price target.
Based on its current share price of $31.34, this implies potential upside of 11% for investors over the next 12 months.
Commenting on the upgrade, the broker said:
Upgrade to Outperform, retaining $34.73 TP. Following the pull-back in security price GMG looks attractive based on a SoTP based valuation and relative to peers.
Catalysts: Guidance upgrades; contract announcements at LAX01 and HK10; establishment of data centre capital partnerships in EU and AU.
