Shares in Cobram Estate Olives Ltd (ASX: CBO) are firmly back on investors' radars today. This comes after the company received a broker upgrade following a major update just before Christmas.
The olive oil producer's share price is surging 17.48% to $3.83 following fresh broker commentary on the company's recently announced US acquisition.
So, what's driving the renewed interest, and why are brokers becoming more optimistic on the outlook?
Image source: Getty Images
One broker changes its tune
According to the release this morning, Ord Minnett has upgraded Cobram Estate shares to buy, from accumulate.
The broker also lifted its price target by 4% to $3.65 per share, reflecting improved earnings expectations following the company's latest strategic move.
While the upgraded target still sits slightly below the current share price, the shift in recommendation is notable. It suggests Ord Minnett now has greater confidence in Cobram Estate's medium-term earnings profile and execution.
A big step forward in the US
Last week, Cobram Estate announced it had entered a binding agreement to acquire California Olive Ranch, the leading producer and marketer of Californian extra virgin olive oil.
The business operates a vertically integrated model, spanning olive cultivation, milling, bottling, storage, and distribution. It also owns the number one selling Californian-produced extra virgin olive oil brand in the US.
Management expects California Olive Ranch to generate around US$150 million in net revenue and US$16 million in EBITDA in FY2026, before synergies.
Importantly, Cobram Estate expects the acquisition to be around 9% EPS accretive from FY2027, the first full year of ownership.
Synergies are forecasted to reach US$12 million in FY2027, rising to more than US$20 million annually by FY2030. This is expected to be driven by higher olive oil yields, lower grove costs, and operational efficiencies.
Supply improves as US operations scale
Alongside the acquisition, Cobram Estate also provided an update on its US supply position.
The company has completed its FY2026 Californian harvest and secured 3.8 million litres of olive oil supply for the next 12 months. That represents a 27% increase compared to last year, helping improve supply certainty for customers.
Production volumes were broadly in line with FY2025, despite lighter crops from some third-party growers. Importantly, output from Cobram Estate's own groves continues to lift as assets mature and yields improve.
Foolish Takeaway
Cobram Estate's share price has already had a strong run, and short-term volatility is always possible after a sharp move.
However, the bigger picture is becoming clearer. The company has meaningfully expanded its US footprint, strengthened its supply position, and outlined a clear pathway to earnings growth through scale and synergies.
That combination appears to be winning brokers back over.
While the stock may not look cheap on every metric, Cobram Estate is now a larger, more diversified business with increasing exposure to the attractive US market.
After this week's broker upgrade, it's easy to see why investors are taking a fresh look heading into 2026.
