Macquarie tips another 13% upside for this ASX 200 stock

The company released its H1 FY26 earnings results yesterday.

| More on:
A female engineer using a measuring instrument to measure the quality of steel pipe.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • BlueScope Steel shares are trading 1.9% higher at $22.52 after an AGM update, meeting the lower end of its EBIT guidance and planning strategic earnings initiatives by 2030.
  • Macquarie maintains an outperform rating for BlueScope Steel, raising its target price to $25.50, indicating a 13.2% potential upside, driven by strong Australian demand and cost reduction efforts.
  • Analysts acknowledge challenges in New Zealand but note improved Australian demand and US steel price support, with ongoing tariffs and trade conditions expected to bolster momentum.

The Bluescope Steel Ltd (ASX: BSL) share price is trading in the green on Wednesday morning. At the time of writing the ASX 200 company's shares are 1.9% higher at $22.52 a piece. This morning increase means the share price is now 7.8% higher over the month and 6.7% higher over the year.

The latest uptick follows the company's annual general meeting (AGM) and 1H FY26 earnings update yesterday morning. The ASX 200 steelmaker confirmed that its 1H FY26 underlying EBIT is now expected at the bottom end of its previously announced $550 million to $620 million range. 

Looking ahead, BlueScope said it is prioritising near-term cost and productivity improvements. It also has strategic initiatives to deliver an added $500 million in annual earnings by 2030. The business plans to unlock value from its significant surplus land holdings. Management is confident in the company's resilience.

Following the latest announcement, analysts at Macquarie have updated its guidance on Bluescope Steel's shares.

Macquarie's latest outlook for the ASX 200 steelmaker

In a note to investors this morning, the broker has confirmed its outperform rating on Bluescope Steel. It has also raised its 12-month target price to $25.50, up from $25.35 a month ago.

At the time of writing that represents a potential 13.2% upside for investors.

"Valuation: We adjust our SOTP-based TP to $25.50ps (from $25.35ps), driven by earnings adjustments," Macquarie said in its note.

Improving Australian demand conditions and support for US price outcomes remain key to the thesis. Management continues to execute well, and the business looks well positioned, as it drives further cost out and makes growth investments.

Earnings changes: We have adjusted FY26/27/28E EPS by +0.4%/+0.0%/ +0.0%, factoring in slightly stronger conditions in ASP, offset by weaker conditions in NZ.

What else did the broker have to say about Bluescope Steel?

Macquarie analysts noted that Bluescope Steel's 1HFY26 trading update sees EBIT at the low end of the prior guidance range of $550-620m. Its analysts currently expect $555 million (up from $551 million prior).

Judging from sub-segmental commentary, most businesses are tracking to the group's prior expectations. Ahead of the start of the EAF in NZ, results appear slightly weaker than we expected. Conversely, in Australia, demand conditions are improving, leading to outcomes marginally ahead of what we discounted. Cost pressures have been neutralised by a one-off GST tax credit, which does suggest minor impacts on the cost outlook relative to expectations.

Meanwhile, in the US, steel prices have supported spread improvement. The broker added that industry commentary has remained broadly supportive of further momentum, as trade conditions tighten and tariffs slow imports. 

"Steelscape seems a weak spot, likely a consequence of weaker prices early in 1HFY26, which should reverse," the broker said in its note.

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A statuesque woman throws earth in the air in front of a rocky outcrop.
Materials Shares

Lithium price rebounds 25% in 2025: Which ASX lithium shares are a buy?

We reveal the latest broker ratings and 12-month share price targets on 3 popular ASX lithium shares.

Read more »

Focused man entrepreneur with glasses working, looking at laptop screen thinking about something intently while sitting in the office.
Materials Shares

'Stronger, sharper, and simpler': Rio Tinto shares fall despite major update

Let's see what this mining giant has released a strategy update.

Read more »

A little boy holds up a barbell with big silver weights at each end.
Materials Shares

$3,000 invested in this ASX silver share in July is now worth $6,577

That's a mighty impressive return in just a few months!

Read more »

Three miners looking at a tablet.
Materials Shares

How much upside does Macquarie tip for Rio Tinto shares?

Let's see what the broker thinks of this mining giant.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Materials Shares

Why are Vulcan Energy shares crashing 33% today?

Let's see why this lithium stock is sinking heavily in morning trade.

Read more »

Female miner on a walkie talkie.
Materials Shares

Leading broker thinks this ASX materials stock is set to double!

This small-cap stock is tipped to take off.

Read more »

Woman with an amazed expression has her hands and arms out with a laptop in front of her.
Materials Shares

$5,000 in this ASX lithium share just one month ago would be worth $8,627 today

Lithium commodity values are rising amid renewed global demand.

Read more »

A beautiful ocean vista is shown with a woman whose back is to the camera holding her arms up in triumph as she stands at the top of a rock feeling thrilled that ASX 200 shares are reaching multi-year high prices today
Materials Shares

How much higher can this explosive ASX stock go?

Analysts are broadly bullish and see some upside.

Read more »