Now could be the time to buy ALS Ltd (ASX: ALQ) shares.
That's the view of analysts at Bell Potter, who believe this ASX 200 stock could offer good returns.
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What is the broker saying?
Bell Potter has been looking at the testing services company's markets and was pleased with what it saw. It explains:
Major & Intermediate (M&I) CY26 exploration budgets: Our proxy for M&I exploration spend is indicating expansion of 24% in CY26. For context, we have not seen this level of growth since CY21-22. Majors have historically comprised 60-80% of total geochemistry samples processed through the cycle.
The broker also highlights that junior equity raisings are growing strongly, which bodes well for demand from that side of the market. It adds:
R6M Junior equity raising grew 131% YoY in Feb'26, the 17th consecutive month of positive YoY growth. We expect Juniors to increasingly deploy raised capital over CY26 into exploration activities. Juniors typically comprise 20-40% of total geochemistry samples processed through the cycle.
But it isn't just mining. Food testing services demand has been strong. It adds:
1) Food testing services performed strongly, with peers reporting mid-single to double-digit organic revenue growth driven by strong demand for contaminants and safety testing (particularly in Europe); and 2) Environment testing organic revenue growth was mixed (low to mid-single digit), with postponement of environmental testing programs reported in North America.
Should you buy this ASX 200 stock?
According to the note, Bell Potter has retained its buy rating on the ASX 200 stock with an improved price target of $28.00.
Based on its current share price of $25.59, this implies potential upside of 9.5% for investors over the next 12 months.
In addition, a 1.6% dividend yield is expected over the period, lifting the total potential return to approximately 11%.
Commenting on its buy recommendation, the broker said:
We maintain our Buy recommendation and upgrade our Target Price to $28.00/sh (previously $25.00/sh), reflecting the model changes mentioned above. ALQ enters CY26 with strengthening industry tailwinds. Major and Intermediate clients have guided to higher exploration spend in CY26, supported by significant FCF growth in an elevated precious and base metal price environment.
In addition, we are yet to see meaningful deployment of the record-breaking Junior equity raising trend observed over the past 12 months. These conditions are reminiscent of the prior up-cycle years of CY21-22 when Commodities delivered revenue growth of >30% p.a. As such, we view consensus expectations as conservative, implying Commodities delivering revenue growth of 14% in CY26.
