For investors looking to add portfolio exposure to big upside, the team at Morgans have just updated guidance on Mitchell Services Ltd (ASX: MSV).
Mitchell Services engages in the provision of drilling services to the mining industry. It offers greenfield exploration, project feasibility, mine site exploration, resource definition, development, and production.
It has been a high-performing ASX small-cap stock in recent times.
Its share price has climbed more than 50% year to date, and 90% in the last year.
For context, the ASX 200 has risen 14% in that same span.
This kind of return is the reason many investors consider small-cap shares, as they often come with increased upside compared to blue-chip stocks.
Investors who have been monitoring the company may be wondering whether this strong run can continue.
Image source: Getty Images
Quarterly update
Yesterday, the company released its quarterly update, which included:
- Quarterly EBITDA of $11.2m – up 110% vs FY25 Q3
- FY26 YTD EBITDA of $32.6m
- FY26 YTD EBT of $15.9m
Speaking on the results, management said:
Pleasingly, the material improvement in operating conditions and financial performance experienced in 1H26 has continued throughout FY26 Q3. As a result, the FY26 financial performance represents a dramatic improvement vs FY25 Q3 and provides a strong foundation to deliver a significantly improved full year FY26 result versus FY25.
Morgans' updated view
Following the release, the team at Morgans updated its guidance on this ASX small cap.
The broker said EBITDA margins continue to show resilience, expanding to ~23% in 3Q from ~20% in 2Q and up from ~11.5% in 3Q25, showing MSV has delivered a step-change in business performance in FY26.
MSV exits Q3 in a strong position on its balance sheet, carrying net debt of $0.9m, after absorbing the $8.5m (4cps) dividend payment made during the quarter. This positions management with capital allocation optionality as it enters 4Q25 and looks toward FY27. MSV continued to execute well in 3Q, with FY26 shaping up as a strong year for earnings, sustainably higher EBITDA margins, improving free cash flow, and scope for ongoing shareholder returns.
Based on this guidance, the broker upgraded its rating to an accumulate (previously hold).
The broker has also placed a target price of 55 cents.
However, despite the positive outlook, the broker's price target indicates the small cap is already trading close to fair value.
After closing yesterday at 52 cents per share, the target price from Morgans indicates an upside potential of just over 5%.
