The team at Morgans has been running the rule over two popular ASX 200 stocks this week.
Let's see if the broker is bullish or bearish on these names. Here's what it is recommending:
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Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
Morgans was pleased with the company's recent half-year results, which were the first since the merger with Brickworks.
Commenting on the result, the broker said:
SOL has recently released its 1H26 result, which represents the first reporting period post the completion of the Brickworks (BKW) merger (Sep-25). It was another strong period for SOL, with Pre-tax NAV increasing ~15% on pcp to ~A$13.8bn. The portfolio delivered a 9.7% increase in NAV per share in the period (versus the ASX200 total return index returning 3.1%).
Net cash flow from investments (NCFI) grew ~15% on pcp to ~A$334m, supported by strong contributions from the private, credit and real asset portfolios. Regular NPAT from the portfolio was up ~21% on pcp to ~A$397m. A 48cps fully-franked interim dividend was declared (28 consecutive years of dividend increases).
However, despite being pleased with Soul Patts' results, due to the outperformance of its shares, it isn't enough for a buy rating. The broker has put a hold rating and $41.85 price target on them. It said:
Our DDM/SOTP-derived price target is now A$41.85 following the BKW merger, which materially changed the portfolio composition and tax base. We also remove the associated premium we had applied to our prior valuation to factor in index upweighting post the merger. Our updated forecasts are overleaf. We continue to like the SOL story, particularly its track record of growing distributions and history of uncorrelated and above market returns. We maintain our Hold recommendation.
Woodside Energy Group Ltd (ASX: WDS)
Another ASX 200 stock that the broker has been looking at is energy giant Woodside.
After removing its 10% conflict premium that was applied to Woodside shares, but upgrading its oil and gas assumptions, the broker has come to a valuation of $33.40. And with its shares racing beyond this price target, it has downgraded its shares to a hold rating (from accumulate). It explains:
We downgrade our rating on WDS to HOLD (from ACCUMULATE). Owning WDS has been powerful insurance (as a hedge against supply disruption) but now trading above A$35/share and above our NAV, it has crossed over into an active wager that the crisis is more permanent than we estimate, which sadly is possible, but should this be our base case steering our strategy? No. We remove our 10% conflict premium and apply our upgraded oil/LNG deck, for a small net change in our target price, now at A$33.40 (was A$33.55).
