ALS Ltd (ASX: ALQ) is an ASX 200 stock to watch after an impressive H126 report yesterday.
The Motley Fool's Laura Steward reported yesterday that the company announced a 13.3% lift in underlying revenue to $1.7 billion and 14.7% growth in underlying EBIT for the first half of FY26, powered by a strong Commodities division and ongoing gains in Life Sciences.
The company is one of the world's largest laboratory testing, inspection, certification, and verification businesses. It operates from around 350 sites across 65 countries.
The team at Bell Potter certainly liked what it saw, increasing the price target for this ASX 200 stock.
Here's what the broker liked.
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Impressive financial result
In yesterday's report, Bell Potter said Commodities and Life Sciences exceeded revenue forecasts.
The commodities performance was underpinned by strengthening sample volume growth at Geochem (low double-digit YoY growth at period-end); operating leverage was offset by weaker price flow-through from legacy contracts, which have largely ceased (EBIT margin was in line with BPe).
The broker said the Life Sciences EBIT margin was 30bps higher than forecast as cost-out continued at Nuvisan and Legacy Life Sciences operations delivered margin expansion ahead of the 20-40bps FY26 target (+57bps YoY).
However, the 19.4cps interim dividend (30% franked) was 6% below expectation.
Upgraded outlook from Bell Potter
In the report, the broker also said the organic revenue growth target was upgraded to 6% to 8% (previously 5% to 7%; BPe now 7.5%).
Commodities organic revenue growth is expected to be within the range of 12% to 14% (previously 5% to 7%; BPe now 13.8%). Additionally, 2H EBIT margin improvement of 100-125bps is now estimated.
Life Sciences organic revenue growth is expected to fall within the range of 4% to 6% (downgraded from 5% to 7%; BPe 4.8%).
Overall, the company's guidance upgrade reflects improving underlying drivers across Commodities.
We expect Commodities to deliver strong EBIT growth and margin expansion over the next 12 months as exploration market activity strengthens, and with profitability also improving at Life Sciences, we estimate ALQ could deliver an attractive 17.5% EPS CAGR over FY26-27.
The team at Bell Potter has a buy recommendation on this ASX 200 stock.
It also upgraded its price target to $25 (previously $23.50).
From yesterday's closing price of $20.87, this indicates an upside of 19.80%.
