The Cogstate Ltd (ASX:CGS) share price is climbing 5% on Friday after the neuroscience technology company posted its FY25 results.

The shares opened higher this morning and have maintained gains as investors digest the company's numbers.

Here's the breakdown of Cogstate's annual numbers, and what the company sees for the coming 12 months.

Cogstate share price reacts to FY25 performance

Investors have bid up the Cogstate share price in Friday's trade following a decent set of numbers. They key takeouts are as follows:

• Group revenue of $53.1 million, up 22% year-on-year.
• Net profit before tax nearly doubled to $13.9 million, up 96% on the prior corresponding period (pcp).
• Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 72% to $16 million, with a margin of 30.1%, up 8.7 percentage points.
• Clinical Trials new contract sales surged 53% to $41.3 million.
• Contracted revenue for FY26 expected to reach $31.5 million, up 8.4% on pcp.
• Maiden fully franked dividend of A$0.02 per share declared.

What else happened in FY25?

The Cogstate share price is tracking higher today, with the company's FY25 results underlined by growth in Clinical Trials revenue. This rose 28% to $50.6 million, partially offset by a 37% decline in Healthcare segment revenue due to amendments to a licensing agreement with Japanese company Eisai.

Operational efficiency and disciplined cost management supported margin expansion, with EBITDA growth of 72% outpacing revenue growth of 22% for the year.

Cogstate also entered into a strategic partnership with Medidata, expanding its reach in Central Nervous System (CNS) clinical research on a global scale.

The company also prepared to launch its first AI-powered products in FY26, leveraging this technology to improve data quality and signal detection for clinical trials.

Cash generation was another takeout, with the company producing $5.4 million, after a $4.8 million share buy-back. Meanwhile, it ended with $35 million in cash on the balance sheet.

But perhaps the biggest takeout for the Cogstate share price, was the company's maiden fully franked dividend.

This marks a first for shareholders, with the company agreeing to pay 2 cents in dividends per share. It intends to continue this, along with "continuing to allocate capital to product and service development that supports growth".

This includes more share buy backs into the future, and targeting a payout ratio of around 20-50% of net profit for future dividend payments.

What did management say?

Cogstate CEO, Brad O'Connor, commented:

FY25 was a transformative year for Cogstate, as we delivered record results while strengthening the foundations for sustainable, long-term growth through innovation and relationships. Our performance demonstrates the value of our diversified contract pipeline, disciplined focus on highmargin recurring revenues, and ongoing commitment to innovation. With momentum building across CNS clinical trials, a deepening strategic partnership with Medidata, and our upcoming launch of AI-powered solutions, Cogstate
is exceptionally well placed to advance brain health globally and deliver increasing value for all stakeholders in FY26
and beyond.

What's next?

Cogstate enters FY26 with $35.9 million in revenue under contract, including $14.1 million of new sales since 1 July 2025.

Management plans to continue investing in science resources, Asia-Pacific expansion, data engineering, and AI development.

While these investments may slightly compress margins (0–3 percentage points), they are expected to drive long-term growth.

According to the release, "Management expects revenue growth to continue but no specific guidance is provided at this time, pending execution of additional sales contracts to provide greater certainty in respect of timing of revenue". This could be positive for the Cogstate share price.

Cogstate share price snapshot

The Cogstate share price is catching a bid today following its FY25 numbers. The gains are supported by record revenue, improving margins, and strategic partnerships, along with its maiden dividend.

Over the past 12 months, the stock is up 75%,

The post Cogstate share price jumps 5% on FY25 results appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cogstate. The Motley Fool Australia has positions in and has recommended Cogstate. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Swings in the oil price, which are usually fuelled by geopolitical tensions, typically vibrate throughout global markets. The S&P/ASX 200 Index (ASX: XJO) is no exception, especially given its heavy weighting to mining and energy shares.

Oil, or "black gold" as it is often called, is an essential component to just about everything, from energy to plastics to the food we eat every day.

But how does this impact investors, and what should you expect going forward with the latest price swings? Let's dive in and see.

Do oil price changes take time to affect Australia?

Oil price shifts don't immediately hit Australian petrol stations. The crude oil has to be transported to refineries, processed, and then shipped domestically. This is a process that stretches over several weeks.

So, despite headlines about surging oil prices, retail fuel prices will lag behind.

Brent crude oil, of which about 90% of the world's oil is priced on, currently trades at US$67.80 per barrel at the time of writing. This is after hitting a high of US$76 earlier this week.

In May, it bottomed at US$62 per barrel.

According to the Australian Broadcasting Corporation (ABC)'s Michael Janda, we "shouldn't really" be seeing the changes of the recent spikes in oil in the petrol bowser any time soon.

That said, when people are reading headlines about surging oil prices, it does seem like an opportune time for fuel retailers to jack up their prices.

That's exactly what Treasurer Jim Chalmers yesterday warned them against doing.

He's tasked the Australian Competition and Consumer Commission (ACCC) to keep a close watch on petrol and diesel pricing, ensuring fairness for consumers.

What's driving the recent oil price volatility?

Now's probably a good time to brush over what's behind the recent volatility in oil prices.

As my colleague Bronwyn recently covered, tensions between Iran and Israel, along with the US' involvement in the conflict, have caused a stir in global oil markets.

Part of this involves the potential closure of the Straight of Hormuz, a key route for oil tankers to ship the liquid gold around the globe. This particular route accounts for around 20% of global supply.

RBC Capital Markets' Helima Croft provided some additional insight into the currently volatile oil markets.

As reported by the ABC, Helima notes that despite recent US military strikes on Iranian nuclear facilities, Iran's ability to retaliate is uncertain.

….President Trump essentially built…a Sun Tzu 'golden bridge' by foregoing a regime change agenda and subsequently signaling an end to maximum pressure sanctions on oil exports to China

This strategic threat has been a significant factor in the recent spike in oil prices and the rally in energy stocks on the ASX.

The ASX 200 energy sector jumped in the first week of conflict and climbed further last week as markets priced in the risks of disrupted global oil supplies.

Energy shares remain sensitive to geopolitical developments, so expect volatility as the situation unfolds.

As for this week, the S&P/ASX 200 Energy Index (ASX: XEJ), which tracks the performance of the major energy players on the ASX, is down nearly 5% at the time of writing.

What does this mean for your portfolio?

Oil price shocks are never just about petrol prices. As I mentioned before, they ripple through the entire economy and markets, especially sectors tied to energy.

So far, ASX 200 energy shares have ridden this wave, both up and down. But investors should be mindful of lag times, geopolitical uncertainties, and the broader economic impacts these times can bring.

That said, rising oil prices often benefit energy stocks but can weigh on other sectors and the broader economy. Energy costs are, after all, an essential component of business expenses.

This backdrop explains why oil prices and ASX 200 energy shares have been on a rollercoaster lately, reflecting global supply fears and geopolitical risk premiums.

The post What does the changing oil price mean for the ASX 200? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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.

If you're watching the ASX tech stocks space, you'll know the sector is buzzing with innovation and growth potential. But it also facing some unique challenges.

Tech is a fast changing sector, that's for sure. Yesterday's trend is today's dinosaur age over in the tech world.

But there's some emerging themes that need critical discussion, including, but certainly not limited too, artificial intelligence (AI), and the impact it has on ASX tech stocks. Here's what you need to know right now.

Why look at ASX tech stocks in the first place?

Technology is no longer just a nice to have feature in life. It's become central to how businesses operate and grow, and ASX tech stocks have benefited heavily. Think about it: without reliable software, hardware, and digital infrastructure, companies struggle to function efficiently in this "modern world".

According to CommSec, the technology sector is often the engine of growth in the economy, with innovations that create new industries and reshape old ones.

Technology is central to the operation of any company. You may not have said this 40-50 years ago. But now if your computer hardware, software and controls aren't functioning then the company isn't functioning – or at least not efficiently.

But it's not just about having the technology to run your business, it's about growth. And Information Technology is a sector usually identified with the growth of companies, industries and the broader economy.

Australia's tech sector is actually pretty small compared to global giants. We have just 11 ASX tech stocks in the ASX 200, and 19 across the broader ASX 300.

For comparison, the US tech sector features over 60 companies with trillions (yes, trillions) in market value.

For those interested in the sector versus individual names, the Betashares S&P/ASX Australian Technology ETF (ASX: ATEC) offers investors a neat way to tap into this dynamic slice of the market without having to pick individual winners. It tracks the overall performance of the  S&P/ASX All Technology Index.

But whether you're interested in the nuances of ASX tech stocks, or simply interested in the sector, one thing is for sure: tech is behind the innovation of Australia's economy. Sit on that for a second.

So what's driving the tech sector now?

AI is front and centre. You'd have to have been under a rock not to have seen at least one headline talking about AI and it's role with ASX tech stocks.

The team at TAMIM Asset Management have been all over the emerging AI trends in tech for some time now.

The firm recently talked about some comments made by Sundar Pichai, CEO of Google, about how the technology is been woven into, well, technology itself.

Pichai likened AI to revolutionary technologies like electricity or fire, both 'innovations' that reshaped entire industries. According to TAMIM:

Pichai speaks at length about Gemini (Google's generative AI suite), which integrates images, text, code, audio, and video. This reflects the next phase of AI: systems that are not just smart in a narrow domain but fluent across modes.

For investors, this underscores the increasing need for compute power, bandwidth, and intelligent orchestration. It also speaks to the rise of converged infrastructure, where cloud, edge, and on-prem systems are optimised in real time.

This is not science fiction. It's already reshaping supply chains, industrial automation, and enterprise IT. We believe infrastructure businesses that understand AI workloads and deliver low-latency, high-availability environments will be the next secular winners.

That means the real winners won't just be the flashy AI startups, but also the companies powering the digital backbone. Think of those data centre operators, semiconductor manufacturers, and providers of computing software.

Meanwhile, Montaka Global Investments also mentioned how AI is making its way into the computer coding domain, through so-called "coding agents".

Coding agents are remarkably powerful already, but it's also likely that the hype around these tools has extended beyond reality.

Montaka has interviewed senior software developers and they suggest these tools are far from capable of safely handling complex software in live production environments where systems and applications are deployed to end users….

…And given the rapid pace of advancements in AI today, the future looks bright for software developer productivity…

…This, of course, is great news for shareholders of tech companies that currently spend billions of dollars on research and development to try and build the next generation of products to extend their growth horizons.

It would seem that AI is taking its grip over tech, and this will no doubt have some impact on ASX tech stocks as we move forward.

Foolish takeaway

ASX tech stocks continue to be at the spear of the tip when it comes to innovation here in Australia. And with that, AI continues to dominate the investment narrative.

What the long-term outcomes from all of this fever will be, only time will tell. Until then, it's going to be an exciting time seeing the list of scenarios created by all of this investment into the sector.

The post What's the latest for ASX tech stocks? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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.

In today's uncertain market, many Australian investors face a tricky question: should you hold more cash in your portfolio?

What you'd think is a fairly simple question would have a simple answer. But like all things investing and markets: it depends.

And while it is technically easy to sit on cash or hold it in the bank, no one has ever got wealthy by simply saving their hard earned pennies under the bed, as they say.

On that note, balancing cash against ASX shares like those in the S&P/ASX 200 Index (ASX: XJO) can feel like walking a tightrope.

So let's see what the experts have to say.

Why does cash matter in your portfolio?

It's actually an age-old debate in the investment world. How much cash, what to do with surplus cash, and, where does the cash come from?

Philosophy aside, cash offers a buffer in investment portfolios, and can play a diversifying role. Just don't expect it to grow in value like some "money alternatives", such as gold. For example, Global X Physical Gold Structured (ASX: GOLD) ETF, which mirrors the price change of gold over time, is up 22% this year.

Keeping cash handy also helps you pounce on investment opportunities without having to sell your shares at the wrong time, avoiding taxes or losses.

Think of it as your portfolio's shock absorber during market dips. Warren Buffett will tell you (maybe not in person, but Berkshire Hathaway Inc (NYSE: BRK)'s mammoth cash pile is one to talk about for this reason).

But as cold and hard as cash is, there are some things to consider.

One of them, Goldman Sachs says, is inflation.

When you have cash in your portfolio, one of the things you have to think about is inflation. You have to think about that eroding into your cash, and reducing your purchasing power.

Meanwhile, Vanguard points out there is an 'opportunity cost' of holding too much cash. That is, the cost of not investing those funds.

At Vanguard, we expect cash to deliver annualised returns of 3.8% over the next 30 years, compared with 6.6% for shares and 4.8% for bonds, based on average market conditions. When we factor inflation into our projections, those figures decline to 1.8% for cash, 2.8% for bonds and 4.6% for shares.

So while there's a "safety" element in holding a heap of cash versus putting those funds to work, clearly, there's a lot to think about with such a simple question.

What about holding cash in volatile markets?

There's no one-size-fits-all answer to this question either. It depends on a set of factors, including your risk tolerance, and financial goals.

When markets wobble, cash can seem like a safe haven. But moving heavily into cash can mean missing out on rebounds. For example, selling out during the 2008 Global Financial Crisis or the Covid-19 crash meant missing years of strong gains afterwards.

A better question might be, how much should you hold in the first place?

Again, the answer is nuanced, but most experts suggest anywhere between 2% and 20% of your portfolio in cash, depending on the factors I mentioned earlier (your risk tolerance, time horizon, goals).

For example, US Bank recommends a "general rule of thumb" of 2–10%. That means for every $1,000 in value, having $20 to $100 in cash could be sensible, according to the firm.

Vanguard also touched on the time horizon point, noting cash is "useful" for those with a short investment outlook (around 2 years), because "there's no risk of a stock market decline depleting your wealth just before you need to access it".

Meanwhile, the team at Morgan Stanley pinpoint that "panic selling" and 'going to cash and staying there' is one of the 5 common mistakes investors make when markets get a bit choppy.

From what it seams, the experts agree that keeping some funds on the side has some value in any portfolio. But at the same time, you've got to have funds invested to reap the rewards of the market.

Foolish takeaway

With markets gyrating in 2025, many continue to see cash in its traditional role as a safe haven. And sure, having some cash allows you to be ready to buy dips in shares, and also keep a portion of funds on the sides.

But just remember, there's an opportunity cost in holding too much in cash on the sidelines. If history has taught us anything, is that markets do a good job of generating wealth over the long run.

Just remember to consider your own financial goals and circumstances in any investment decision.

The post Should your portfolio be holding cash in this market? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Accounting giant KPMG has its finger on the pulse all things finance and the economy, so when it releases a report on interest rates, it's good to take note.

The firm expects the Reserve Bank of Australia (RBA) to cut its policy rate up to three times in 2025, driven by geopolitical tensions, potential oil price spikes, and their flow-on impact on the Australian economy.

What does this mean for Aussie stocks, measured by the S&P/ASX 200 index (ASX: XJO)? Let's dive in and see.

Why could the RBA drop interest rates?

Recent conflict overseas threatens to push global oil prices sharply higher, KPMG says, and this could potentially "shave between 0.15% and 0.20% off Australia's GDP this year".

Gross domestic product, or GDP, is a measure of a country's economic performance. And no, we don't necessarily want to see it drifting lower.

But in a weird way, this is a case of "bad news is good news". Why? Due to the RBA's response to lower economic growth, that is, lower GDP.

When the RBA senses the economy is set to slow, it pulls out its one major lever, which is to lower interest rates. This has several impacts, most notably, reducing the cost of borrowing, thereby stimulating the economy.

The thinking is, that this economic pressure, combined with other global uncertainties, like tariffs on trade, could push the RBA to thinking more about rate cuts in the near future.

But what would this look like?

KPMG notes that if there is a prolonged disruption to oil markets, caused by overseas geopolitical tensions, could see oil prices surge from around US$65 per barrel to US$130 by early 2026.

By our assumed end of the conflict (2026Q1) this higher oil price would shave global GDP growth about -0.1%, but Australia could be proportionately hit slightly harder given our higher dependence on oil.

Such a spike acts like a hidden tax on Australian households and businesses. It reduces spending power, since oil fuels sectors across the economy, especially in areas like transport and energy.

This kind of pressure (energy costs rising), if sustained, can dampen economic growth, forcing the RBA to weigh its options.

KPMG expects the RBA to look through any short-term inflationary impact of any oil shock, and combined with the fact that core inflation is now looking well entrenched in the target band and there is already an overall weakness in the Australian economy (especially the private side), we have revised down our cash rate forecasts for this year.

Our expectation now is that the cash rate will end the year at 3.1%, rather than 3.35%.

Last week, we covered KPMG chief economist Brendan Rynne's view on the situation after Australia's unemployment data was released.

Rynne also painted the scene for further rate cuts in the RBA's next meeting on July 7, after the June unemployment rate held firm at 4.1%, despite 2,500 Aussies posting job losses compared to May.

What else is influencing the interest rate outlook?

Beyond oil, the looming changes in US trade policy threaten to subtract another 0.3% from Australia's GDP by late 2025 and into 2026.

Meanwhile, the RBA itself noted the "weaker outlook for Australian GDP" in its May monetary policy meeting.

Given that the rapidly evolving and unpredictable global policy environment was creating more uncertainty than usual around the baseline forecasts, members also considered a range of alternative scenarios for how the Australian economy might evolve under different policy assumptions. 

But even with this debate, the RBA cut the cash rate (Australia's policy rate, that is used to set market interest rates) by 0.25%, seeing it rest currently at 3.85%.

If KPMG is right, we could see another 0.75% drop by the end of this year. Time will tell.

Foolish takeaway

Many believe that lower interest rates are on the horizon, potentially easing mortgage repayments and encouraging business investment.

But nothing is set in stone, despite the push from experts like those at KPMG. If only we had a crystal ball.

As mentioned, the RBA meets next on July 7. Keep your eyes peeled then.

The post Why does KPMG think the RBA will cut interest rates this year? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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.

Artificial intelligence (AI) shares have been the talk of the markets in 2025. You'd have to have been stranded on a desert island to have missed all the headlines.

And AI has certainly proven itself in some fairly interesting use cases. Not to mention, it's potential impact to everything from work productivity, health, and problem solving.

But with a big crowd comes lots of noise. And boy, has it been noisy for the basket of AI shares trading on global stock exchanges.

But are they worth the hype? Leading hedge fund Man Group, situated in the UK, has run its numbers, drawing parallels of today's AI hype to the infamous "DotCom bubble" of almost 25 years ago.

Let's take a closer look.

Are AI shares the same as 'DotCom' companies?

Man Group is one of the oldest hedge funds in existence. It manages a colossal amount of money for global investors, and has access to the latest trends in technology. AI included.

The firm points out that, much like the DotCom bubble two decades ago, today's valuations of AI shares are heavily concentrated among a few tech giants.

Some of these include Google parent Alphabet Inc. (NASDAQ: GOOG), Meta Platforms (NASDAQ: META), formerly Facebook, and global chip powerhouse NVIDIA Corp (NASDAQ: NVDA).

For reference, the DotCom bubble refers to the large run up of internet companies in the late 1990's and early 2000's. Many of these were unprofitable, despite trading at sky-high valuations in the market.

Naturally, this led to a sharp crash in global markets when the bubble burst, after many investors got over the hype.

But Man Group sees plenty of similarities between previous stock market bubbles, and now, with AI shares.

The DotCom parallel is hackneyed, but clichés are useful sometimes, and this one might be all we've got. There have only been two other US equity bubbles in the last 100 years (the 'roaring twenties' and the 'nifty fifty'), and both were much more broadly dispersed, covering sectors as variant as railroads, consumer goods, automobiles and financials, as well as nascent technologies.

The DotCom bubble was different in terms of its concentration of performance around internet innovation…

…And, to return to the original point, maybe AI isn't that difficult after all. Really helpful, but widely available, and not conducive to the creation of a new corporate aristocracy. In that eventuality, these multiples could end up as albatrosses.

All negative? Not so

Man is mostly talking about the US stock indexes, but there are some parallels with the S&P/ASX 200 Index (ASX: XJO) at the time of writing. It too has a growing influence of AI.

And while the firm points to the risks in potentially over-hyping AI shares, it's clearly not all negative.

In a report from March this year, global consulting giant McKinsey & Co, noted that companies are making "organisational changes" to generate value from AI.

It says that companies "with at least $500 million in annual revenue" are embracing AI faster than their smaller counterparts. This may or may not be positive for companies providing this tech.

But the big difference between the current excitement, and the DotCom era (and indeed every other bubble) is concentration. 

The space continues to be dominated by one name: OpenAI's ChatGPT platform. Per Man Group's analysis:

OpenAI has 10 million individual paying customers, shelling out US$20 a month, and a further one million business clients on US$2,000 a month. So perhaps in the region of US$26 billion annual revenue. 

Nothing artificial about the size of those numbers, that's for sure.

Plus, despite the cautious tone, some AI shares are reporting chunky productivity gains, according to Man Group.

Some are reporting 16% annual sales growth per employee, it says. Sales per employee is measured by taking a company's total revenues divided by total number of employees, and is a measure of productivity.

Foolish takeaway

Man Group has painted a mixed view on the state of AI shares. But the hedge fund also warns of valuation risks: buying great businesses at excessive valuations often leads to losses, as history showed with tech stocks in 2000.

Meaning, that if AI shares fail to deliver the extraordinary growth baked into their prices, investors could face significant headwinds if their market prices respond negatively to this.

And whist no one has a crystal ball, the lessons of the past do certainly ring true.

On that note, it's always wise to quote none other than Warren Buffett in these scenarios: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price".

Sage advice in the current market.

The post What does this hedge fund giant think about AI shares? appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Meta Platforms, and Nvidia. The Motley Fool Australia has recommended Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It's no secret that 2025 has been a year of ups and downs in business confidence, earmarked by volatility in markets, driven by broader geopolitical uncertainty.

And uncertainty seems to be the dominant theme of the year so far. This has its own impacts here locally, measured by the sentiment of both consumers and business alike.

And whilst business confidence nudged up slightly last month, according to the Roy Morgan survey, it remains well below historical levels.

Not that you'd notice by looking at the S&P/ASX 200 index (ASX: XJO). It continues to track higher over the past few months.

But what does all this mean for the new financial year? Let's dive in and see.

Why has business confidence "modestly" improved?

Business confidence in Australia ticked up by 2.9 points to a level of 99.6 in May 2025, according to Roy Morgan's latest survey data.

This might seem positive, this is still below the "neutral level" of 100. The survey itself was made up of more than 1,200 responses.

Plus the survey also notes that "in the weeks after the Federal Election in late May 2025, Business Confidence dropped by 2.9 points".

And while the recent Federal Election has reportedly sparked some optimism, Aussie businesses are still cautious about their own financial prospects heading into FY26.

The election result produced mixed results across the five questions that comprise the Business Confidence index with more confidence around the long-term prospects for the Australian economy (32.6%, up 6.1% points, expect 'good times' over the next five years) and greater confidence that the next 12 months is a good time to invest in growing the business (42.1%, up 3.9% points).

In contrast, there was less confidence about businesses own prospects with only 32.3% (down 3.7% points) expecting to be 'better off' financially this time next year (the lowest figure for this indicator for a decade since August 2015) and only 22.5% (down 1.8% points) saying they are 'better off' financially than this time a year ago – the lowest figure for this indicator for five years since August 2020.

Where were the changes?

It was Queensland that came in with business confidence above the neutral mark at 105, up 6.5 points from last year. Victoria's confidence also lifted to 98.3.

But Western Australia and NSW each saw sharp declines. Whereas our southern neighbours in Tasmania? Results showed a low of 86.9 in the latest survey numbers.

Industry wise, accommodation, and education came in comfortably above the national average. On the flip side, agriculture, forestry & fishing remains the least confident sector at just 68 from a maximum 100 points.

Impacting the outcome was a clear tilt towards global trade uncertainty, sparked earlier this year.

The Reserve Bank of Australia's Assistant Governor of Economics, Sarah Hunter, noted the impact of global trade decisions and their impact on the local economy in a speech last month.

Hunter also mentioned the impact this has had on markets, and the "compensation" investors now demand for putting their hard earned funds to work.

…increased uncertainty and risk led investors to require larger risk premia to hold risky assets. This was reflected in increased spreads on corporate bonds, and some increases in equity risk premia that put further downward pressure on equity prices.

In other words, investors wanted more compensation for holding riskier assets.

Meanwhile, Roy Morgan's CEO, Michele Levine acknowledged that the slight increase of business confidence in the firm's latest survey "was not widespread", and was driven "entirely by two indicators" relating to Australia's long-term economic growth.

It already looks like it will be an interesting start to the new financial year.

So what does this mean for FY26?

Business confidence is a critical indicator for the Australian economy. It's also a gauge of the current investment climate.

So the fact Roy Morgan's current data suggest there is some optimism about Australia's long-term prospects is somewhat promising.

But at the same time, it's crystal clear that businesses remain wary of their immediate futures.

Whether or not there is widespread hesitation, or whether this could translate into more conservative spending and hiring decisions in FY26 remains to be seen.

In saying that, it's best to keep a close eye on any upcoming economic data and global events.

The post Aussie business confidence is down. What does this mean for FY26? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow 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.

Australia's biggest landlord, Goodman Group (ASX: GMG), released its Q3 update this week with several notable takeouts.

Price action in its share price following the update wasn't so rewarding, with investors selling the stock down from highs of $32.96 to $31.80 apiece at the time of writing.

Now, top broker Macquarie has chimed in with its take on the numbers, unpacking each segment line by line for the benefit of investors.

Let's dive in and see.

What's Macquarie's view on Goodman Group?

Goodman Group posted decent numbers in Q3, with 96.5% of its portfolio occupied during the period and over $13.5 billion of works currently in progress.

A good chunk of these projects are in data centres, more than 50% in fact.

Management reaffirmed its guidance and expects net profit growth of 9%, which came in close to what the market was expecting. It held dividends at 30 cents per share.

But data centres continue to be the talking point. Macquarie's note to clients this week covered this extensively.

Data centres (DC) now comprise >50% of work in progress (Dec-24: 46%) and [the LAX01 data centre] has converted to fully-fitted from powered shell.

Secured power is 2.7GW (Dec-24: 2.6GW) with the total power bank being 5.0GW (Dec-24: 5.0GW). Yield on cost targets reaffirmed with powered shell ≥ 9% and fully-fitted ≥ 10%. Management also suggested discussions have progressed with several DC customers and capital partners.

The broker also said that commencement yields have "stepped up to 9%" at the time of publication, but that "commencements and completions remain low".

In my view its likely the market observed this stat too, potentially explaining some of the sell-off this week. Investors had potentially priced Goodman Group to maintain the rate of $6.5 billion in annualised production, versus the $6.2 billion it reported in Q3.

So what's the price target?

Despite some mixed numbers in the report, Macquarie's valuation tweak was minor. It adjusted its price target to $36.06, a decline of less than 1%.

This implies around a 13% upside at the time of writing, excluding any additional dividend income.

As for recommendations, it rates Goodman Group a buy, noting it "continues to look relatively attractive to large market-cap industrials" when comparing the current share price to projected earnings growth.

Interestingly, the broker sees Goodman at "fair valued" based on a "sum-of-the-parts basis", which simply means the value of all operating divisions and operating assets combined.

Macquarie's forecasts expect approximately $6.4 billion in annual production from FY25 to FY28, which is close to the current pace.

The difference of $0.2 billion in production this quarter could shave around 2% off operating profit for the year, it says.

But again, data centres continue to dominate the outlook:

Whilst 3Q commencements were weaker than expected, we acknowledge that quarterly commencements can be volatile. Nonetheless, we consider earnings sensitivity to potential downside risk from a lower production rate. ~$6.4bn of production in FY24A implied an overall EBIT-take of ~20.0%.

We assume this accelerates to ~22% given greater developments on balance sheet and higher- margin developments such as data centres.

Foolish Takeaway

Goodman Group continues to push into higher-margin sectors like data centres, which Macquarie believes could drive future earnings growth.

Whether or not this will materialise is a conversation between time, fate, and the good old economy.

The stock is down nearly 11% this year to date.

The post What price target does Macquarie have on Goodman Group shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Elders Ltd (ASX: ELD) shares are drawing attention after the company posted a mixed half-year update earlier this week.

The agribusiness company's stock has had a difficult year in 2025, down 13% at the time of writing, with a 6% slump in the past week alone.

Elders shares fetch $6.22 apiece, down from highs of over $7.50 observed in February.

Analysts at Macquarie posted their take on Elders' half-year numbers in a note to clients this week, covering "the good", the "not so good", and the "interesting" in their update. Let's dive in.

Elders shares slump on half-year numbers

Elders reported a decent set of earnings for the first half, with sales up 5% to $1.4 billion, and pre-tax earnings growing by two-thirds over the year.

This comes after a dry first quarter last year, and a rebound in the livestock Agency segment, where gross margins surged to 37%.

Top broker Macquarie laid out its thoughts in the note to clients this week, highlighting these gross margins as a strong point, along with the fact that "livestock outlook and fundamentals remain sound".

It also commented on Elders' wholesale network, which produced $14 million in pre-tax earnings for the period.

But Elders shares were heavily sold after the earnings update, having missed expectations from several firms. The "not so good" from Macquarie's note included these takeouts:

Sales of $1.41 billion below our $1.57 billion estimate. EBITDA of $96 million below our $116 million. Underlying EBIT of $64 million (+67% vs pcp) below our $78 million and Visible Alpha consensus of $73 million…

…Operating cash flow of $31 million below our $50 million and vs pcp of $49 million with working capital build of $48.5 million incl receivables +$36 million, inventories/ livestock +$109 million and payables + $96 million. Delayed season in drier regions saw larger WC increase vs our estimates.

So despite the growth, it was behind what the market was expecting. This saw investors flee from Elders shares this week.

Macquarie also trimmed its FY25 profit forecast by 18%, reflecting the weaker pricing and volumes in the AgChem segment.

It made further a 14% reduction in earnings through to FY29.

I'd note that research restrictions currently prevent Macquarie from providing a valuation on Elders shares.

What else was said?

One "interesting" takeout from Macquarie's view on Elders shares was that management provided no "quantitative guidance" in the earnings result.

It also said the company is projecting an "average" winter crop this year, even with dry conditions in South Australia and Victoria.

"Elders' geographical presence and favourable conditions across many other parts of the country partially mitigates this", the broker said.

On the dividend front, Elders declared an 18 cents per share payout, maintaining an 84% payout ratio. This is above its usual 40-60% target, but management expressed comfort with this higher distribution level in the short term. No saying what this means for Elders shares moving forward.

Foolish Takeaway

Elders shares delivered a mixed first half, with strengths and weaknesses observed throughout the company's numbers.

Macquarie hasn't provided a rating, but I'd note that the list of "good" and "not so good" comments in its latest note on the company was fairly balanced.

Meanwhile, Bell Potter retained its buy rating on Elders shares after the result, valuing the stock at $9.10 apiece.

The post Elders shares result: The good, the not so good and the interesting, according to Macquarie appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Elders. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

TechnologyOne Ltd (ASX: TNE) shares have been on a bit of a tear lately, with the stock jumping 15% this past week.

This brings gains in the software company to more than 21% for the year, after jumping by more than a third during the last month of trade.

Judging by those numbers, momentum is behind the stock, and sentiment is overwhelmingly positive. Investors are currently paying over $90 for every $1 of TechnologyOne's profits to own it today, equal to a price-to-earnings (P/E) ratio of 90x.

So, is now the time to snap up this ASX tech stock, or should investors hold off? Let's see what Macquarie thinks.

Macquarie's latest on TechnologyOne shares

Top broker Macquarie released a note on TechnologyOne shares after the company posted its half-year results earlier this week.

Analysts highlighted strong "operating momentum" across several divisions for the software company. Factors like its Software-as-a-Service (SaaS) offering are a "tool do driver higher (Annual Recurring Revenue) ARR growth" it says, which will be "accretive" to the company's pre-tax margins.

That, along with the company's pipeline, are two standouts for Macquarie.

Deal wins at TasTAFE, the Australian Energy Regulator and Islington Council validate the strength of the pipeline. This strength comprises both ANZ and the UK as well as the Local Government, Higher Education and Government verticals.

Incremental detail on this in recent research. This opportunity is defined both by higher customer numbers and increasing deal sizes. We highlight below that most new deals are larger than the current ARR per customer of A$401k.

Macquarie also flags the upcoming investor day and the company's annual results as potential catalysts for the business.

Despite the upbeat momentum, Macquarie retained its hold rating on TechnologyOne shares. The reasons why seem fairly explanatory.

For one, the stock is trading at a hefty valuation, equal to a forward P/E of 78x estimated earnings at the time of the report. That's $78 for every $1 of profits.

According to the data site World PE Ratio, the estimated P/E ratio for the Australian stock market is currently 19.4x.

This lofty asking price leaves "little margin for error", it says, so any slip in execution or market sentiment could see this valuation contract down sharply. This could see TechnologyOne shares track lower.

Investors mightn't be willing to pay as much to buy a dollar of the company's earnings, in other words.

It also noted that some of TechnologyOne's products, such as the enterprise asset management and enterprise budgeting divisions, saw fairly "soft" ARR growth.

"Although this is potentially affected by rounding error", Macquarie notes, "it is clear that growth in these products was muted relative to the strong performance in Local Government and Higher Education".

The verdict? Small margin of safety, little margin for error, and potential risks as a result of this. In other words, Macquarie thinks TechnologyOne shares are currently expensive.

Foolish Takeaway

TechnologyOne shares are riding a wave of deal wins and growing operations, but does this sway analysts at Macquarie? Not so.

The broker reckons the software stock is currently expensive, trading at high valuation multiples, which leaves little wiggle room if the company doesn't meet expectations.

While this is a potential risk, there's no denying the current strengths of the underlying business, on full display in its half-year numbers.

The stock is up more than 113% in the past year and fetched $38 apiece before the open on Friday.

The post After surging 13% yesterday, are TechnologyOne shares a buy, hold or sell according to Macquarie? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Technology One. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Want exposure to financial stocks outside the big 4 banks? Credit Corp Group Ltd (ASX: CCP) is an intriguing option that investors should consider.

The company, currently valued at $944 million, or $14.11 per share, buys debt from issuers and helps customers service the liabilities.

It's an interesting business model, one that's got analysts at Macquarie talking.

The broker released a note on the company this week, using the quarterly results of comparable companies, Praemium Ltd (ASX: PPS) and US-listed Encore Capital Group Inc (NASDAQ: ECPG) as a "read through" for Credit Corp's American business.

Let's dive in.

Looking outside the big 4 banks? Credit Corp is here

Macquarie posted a note to clients this week covering a suite of financial stocks outside of the big 4 banks, Credit Corp being one of them.

It used Praemium and Encore's quarterly numbers to get a potential read on what investors might expect from Credit Corp's earnings in the US – an interesting method, to say the least.

Before proceeding, let's take a step back and get to know the company in question.

Credit Corp earns its crust by acquiring what is known as purchased debt ledgers (PDLs).

These are essentially portfolios of overdue or defaulted debts that companies buy from lenders, such as banks or finance companies.

So, how does it work?

When a borrower fails to repay their loan or credit card, the original lender often sells this 'bad debt' to a specialist buyer (like Credit Corp) at a discounted price.

This buyer then takes on the job of collecting the money owed. And in the process, hopes to make a profit. It is a fairly niche domain, outside the realms of the big 4 banks.

As for Macquarie's note, it says that Praemium's PDL purchase volumes were down 5% in the first quarter. Meanwhile, Encore saw an uptick in its volumes.

It says the recipe of "higher lending and growth in the [credit card] charge-off rate continues to drive robust portfolio supply in the US". This, even as Praemium's pricing estimates have "stabilised".

This is important because "the outlook for Credit Corp is increasingly weighted to US PDL and consumer lending performance in Australia".

It rates the company a hold with a $16.27 price target, which represents a 15% upside at the time of writing.

Does this appeal to investors?

The big 4 banks have yet to report their annual numbers. Still, Credit Corp posted a market update earlier this month, where it updated its guidance on net lending for the year.

It now projects $60 to $70 million in net lending for the year, up from $45 to $55 million previously. It continues to project $90 to $100 million in net profit for the year.

Macquarie maintained its FY25 earnings guidance for the company and made no changes despite the company upgrade.

No change to forecasts. Credit Corp updated FY25 guidance at the Macquarie conference with: 1) UNPAT $90-100m (unchanged); 2) PDL purchasing $200m-250m (unchanged); and 3) Net lending upgraded to $60-70m (from $45-$55m).

According to the broker, catalysts for the future might include a recovery in Australian PDL volumes and growth in PDL volumes in the US.

According to Commsec, the stock is also rated a buy based on the consensus of analyst estimates, with a consensus price target of $19.97 apiece, per TradingView.

Whether this offers more appeal than the big 4 banks at this time, we will have to see. The stock trades at nearly 19x earnings, ahead of the likes of ANZ Group Holdings Ltd (ASX: ANZ) at 13x.

Credit Corp is down 12% in the past year.

The post Want a financial stock outside the big 4 banks? Macquarie tips 15% upside for this small cap financial appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Praemium. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

New Hope Corporation Ltd (ASX: NHC) shares have suffered a beating so far this year. They are down more than 27% at the time of writing, following a 6% sell-off in the past week alone.

Shares in the coal miner are currently swapping hands at $3.61 per share, down from highs of $4.88 in early February.

Now top broker Macquarie has weighed in on the debate, reiterating its stance on the coal mining giant in a note to clients this week. Let's dive right in and take a look.

Macquarie's outlook for New Hope shares

Macquarie was quick to post its analysis of the coal giant's Q3 FY25 earnings, which were released on Monday. The result saw New Hope shares sink into the red.

Macquarie's note highlighted the decrease in New Hope's production, which dropped 3% compared to the previous period. A declining coal price was partly to blame. Still, sales were slightly higher than expected, at 2 million tonnes, a 1% increase over the year.

However, the company's sales and production targets were slightly below expectations due to rail capacity issues at its New Acland mine, resulting in a 7% miss in coal sales guidance at the site.

Management's guidance for annual coal production was also reduced as a result of these setbacks.

Consequently, Macquarie reduced its target price on New Hope shares to $4, down 7% from the previous target. This implies an upside of about 11% at the time of writing.

The broker did not change its rating of hold on the coal mining stock.

NHC highlighted rail capacity constraints at New Acland with continued major rail system outages expected in June and July. NHC has reduced coal production/sales guidance by 9%/10% at New Acland due to the railing bottleneck.

We note the revised coal sales guidance of 2,250-2,650kt represents a miss of 7% (mid-point) against market consensus, but only 2% at the group level

What's next for New Hope?

Thankfully it wasn't all downside for New Hope shares, likely the reason behind the hold versus a sell rating in my view.

One of the "interesting" points Macquarie noted was the company's buyback program, which is set to continue. It has about $100 million authorised for this over the coming year. This is about 3.3% of its current market cap of $3.1 billion.

In terms of upcoming catalysts, the broker says that improvements to rail capacity at the New Acland are also expected.

Rail capacity increase at New Acland and production ramp up at Malabar present near-term catalysts for NHC…

…. The A$100m on-market buyback continues with the company having a $288m in cash and $372m in fixed income investments.

Macquarie joins the consensus of analyst estimates in rating New Hope shares a hold, according to CommSec.

Foolish Takeaway

New Hope shares are currently under pressure after the coal miner's Q3 numbers, and Macquarie has just weighed in with its views.

Whilst it rates the stock neutral, it does value the company at $4 apiece, which, excluding any prospective dividends, equals about 11% upside at the time of writing.

As to what happens from here, only time will tell. The stock is down 26% in the past year.

The post How much upside does Macquarie tip for New Hope shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Gold is back in focus, and with good reason. After a series of record-breaking performances, it is now in vogue for investors looking for a hedge against inflation, geopolitical risks, and market volatility.

For those eyeing physical gold bullion or ownership of the yellow metal through products such as the Global X Physical Gold Structured (ASX: GOLD) ETF, it's crucial to understand how to incorporate gold into your portfolio.

So, let's examine the do's and don'ts of holding gold and how much to allocate in your portfolio.

Why allocate to gold in the first place?

First, let's unpack what's behind this latest gold rally, that's seen the precious metal rise to A$5,034 per ounce, equal to US$3,228 an ounce – some of the highest prices on record.

Gold holds a "save haven" status amongst other asset classes, and investors have traditionally turned to the yellow metal in times of uncertainty.

This time is no different.

According to Goldman Sachs, investors have bid up the price this year as global markets undergo a bout of volatility.

Since March, investors have been increasing their holdings of gold, driven by concerns about the health of the economy and market volatility.

Longer term, Goldman Sachs Research expects prices to be propelled by multi-year demand from central banks. Our analysts' gold price prediction is for these two factors to push the metal to new record highs.

As seen, buying from global central banks, looking to diversify their holdings from US Treasury Securities, has also spurred the rally.

Goldman forecasts that it could reach US$3,700 per ounce (A$5,767) by 2025, potentially rising further as investors pile into exchange-traded funds (ETFs) tracking the gold price.

But buyer beware: In its latest Fund Manager Survey, Goldman rival, Bank of America, noted nearly half of fundies surveyed reckon the yellow metal is overvalued.

Speaking to Bloomberg Television, the firm's Francisco Blanch said "everyone's long gold", which could present a risk if all decide to sell at once.

Further, here's some food for thought before reading on: The metal pays no interest and doesn't represent a share in a business, which produces things like products and services and pays dividends.

How much gold should you hold?

Ultimately, the key question for investors is: How much gold should you include in your portfolio? I'll start this off with the standard finance and investment response: It depends. I know. Forgive me.

It depends on your own financial circumstances, portfolio positioning, and long-term investment goals, notwithstanding your own views on the precious metal.

That said, there are some fairly rigid recommendations from the team at VanEck.

The investment firm notes that a "well-diversified portfolio" typically includes a mix of stocks, bonds, and alternative assets like the yellow metal in question. It ran a study, looking at returns going back to the 1970s, comparing these three major asset classes.

Findings were notable.

The answer: investors should have allocated 18% to gold and 82% to the portfolio of stocks and bonds.

While there's no one-size-fits-all answer, a 5% to 20% allocation to gold is well supported with a time-tested approach to asset allocation.

This should be enough to provide significant diversification benefits and protection against inflation, market volatility and geopolitical risks.

So, 5-20% of your investment portfolio weighted in gold, either as physical bullion or ETFs, equal to 5 to 20 cents for every dollar invested.

This aligns with hedge fund titan Ray Dalio's "All Weather" strategy, which currently allocates 7.5% to the metal.

Foolish Takeaway

Many experts agree that a small allocation to gold in an investment portfolio has its benefits. These positives tend to expand in times of uncertainty, where the metal really shines (pardon the pun).

In today's world dominated by economic uncertainties, many believe its role in a diversified portfolio cannot be overstated. Based on its internal findings, VanEck recommends 5-20%.

But all that glitters isn't gold (again, pardon), so I'll leave investors with Warren Buffett's words of wisdom comparing it to stocks: "The gold itself doesn't produce anything".

In the long run, a diversified portfolio seems to always come out on top.

The post What's the right allocation for gold in my portfolio? appeared first on The Motley Fool Australia.

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Bank of America is an advertising partner of Motley Fool Money. Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bank of America and Goldman Sachs Group. 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.

James Hardie Industries PLC (ASX: JHX) shares are in the spotlight as the building products company prepares to release its FY25 results later this week.

Shares have been heavily sold so far in 2025, with the stock down nearly 24% this year, despite catching a bid in the past month of trade.

They now fetch $38.09 apiece, a far cry from the $50 per share market value observed in early January, when trading resumed for the new year.

Investors are no doubt keen to know whether James Hardie shares are a buy, hold, or sell heading into its upcoming earnings. So here's Macquarie's take on the situation. Let's dive in.

Macquarie still neutral on James Hardie shares

In a note to clients this week, Macquarie kept a hold rating on James Hardie shares, valuing the business at $40.20 per share.

This is about 5-6% upside potential at the time of writing, and is unchanged from the broker's previous rating.

Macquarie is fairly positive on James Hardie shares when looking out to FY26. It projects net profit of US$697 million, slightly ahead of the consensus of analyst estimates of $693 million.

But in the near term, the broker is less so. It says business conditions are "worsening" for the company, mainly in its repair and remodel (R&R) division. This will likely cause a "softening top line" for the business.

Market conditions are worsening, particularly in the R&R market, as borne out by our recent contractor survey readings. Uncertainties have materially increased over the last six weeks.

So, we would expect more cautious commentary on market conditions than those contained in the group's recent 4F filing – which included forecasts that pre- dated the deal announcement on 24 March.

Macquarie also noted its "optimism index", which measures activity in the R&R market, "fell markedly in April to its lowest levels on record".

James Hardie is also undergoing a major restructuring effort. It is targeting US$100 million in manufacturing cost reductions. According to Macquarie's note, the company was around a third of the way through.

This is a positive for James Hardie shares, per the broker.

That said, it has not included the proposed acquisition of outdoor living company AZEK and the corresponding increase in debt this would bring in its forecasts.

And even with more efficiencies, the broker can't overlook the tighter market conditions, including high mortgage rates over in the US.

"This should weigh on outlook commentary, even if it is offset by strong efficiency progress", it said, reiterating the hold call on James Hardie shares.

I would also note that Bell Potter has a buy rating on the company with a $63 price target.

Foolish Takeaway

Top broker Macquarie has just posted its updated rating and analysis on James Hardie shares leading into earnings this week.

Analysts are wary of the broader issues at hand, including the macroeconomic backdrop and a weaker market for the company to sell into.

The stock is down 30% in the past year.

The post Does Macquarie rate James Hardie shares a buy, hold or sell? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

S&P/ASX 200 Index (ASX: XJO) building stock Fletcher Building Ltd (ASX: FBU) has had a shaky start to the year, despite its share price lifting about 20% into the green so far.

Shares in the $3.34 billion company by market value currently fetch $3.04 apiece, having slipped from highs of about $3.14 over the past week.

Brokers from Macquarie have now weighed in and reckon the company is a sell, set to face headwinds from challenging market conditions.

But as an ASX 200 stock with a long history, is Fletcher Building one to watch? Let's dive in and see.

ASX 200 stock set to slide: Macquarie

Broker consensus on Fletcher Building has been cautious, with some analysts adjusting their expectations following a string of disappointing results.

Macquarie, for instance, revised its outlook for Fletcher Building in a note to clients this week, projecting a significant decline in the company's stock value.

The broker forecasts a sharp drop in the stock price over the next 12 months, valuing the ASX 200 building stock at $1.85 apiece, down from $1.95 previously.

This is around 40% downside at the time of writing, nearly half of the company's market value.

The key factor influencing Macquarie's pessimism? A persistent decline in market volumes, and "no significant improvement in market conditions", particularly in Australia and New Zealand. Fletcher's "divisional restructuring", announced this week, also plays a part.

Businesses operating in the commercial and infrastructure segments continue to face reduced or deferred spending, partly due to recent weather events and reduced sub-division activity.

Meanwhile, residential property sales also remain at subdued levels, reflecting lower levels of liquidity across the market" (prior guidance was 175 unit sales from 1HFY25; Macquarie +146, now +136). FBU had indicated previously that 40% of its EBIT is typically derived in May-Jun, largely due to spec Residential sales recognition and Dist division rebate accounting.

This view sees the broker lowering its estimates for the ASX 200 stock's profits by an average of 4-5% over the next three years, rating it to "underperform, given predominantly negative catalysts".

What's next for Fletcher Building?

Macquarie isn't the only broker bearish on the ASX 200 stock.

Goldman Sachs placed a sell rating on the stock at the end of April, valuing it at $2.85 apiece. It, too, commented on the series of earnings downgrades and market volumes declining by 10-11% in the first half of FY25.

It does not "forecast an immediate recovery in volumes", thanks to macroeconomic factors like interest rates, and "heightened competition" for the company.

Only time will tell whether the ASX 200 stock can overcome these headwinds, but for now, sentiment is flat. According to Commsec, the consensus of analyst estimates rates it a hold.

Foolish takeaway

Macquarie expects this ASX 200 stock to underperform in the next 12 months and just downgraded its price target even further.

This is despite a decent run for Fletcher shares, which are up more than 16% in the past year.

As to where to from here, I'd say to keep a close eye on this name for the coming months, noting any surprises in its earnings announcements.

The post Which ASX 200 industrials stock does Macquarie expect to sink 40% over the next 12 months? appeared first on The Motley Fool Australia.

More reading

• Why 29Metals, DGL, Fletcher Building, and Newmont shares are falling today
• Fletcher Building posts positive Q3 volumes amid new global risks
• 4 ASX shares at 52-week lows: Buy, hold, or sell?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX dividend share New Hope Corporation Ltd (ASX: NHC) has taken a hit in 2025, with the stock down 21.56% year to date.

Despite this, shares in the coal miner currently fetch $3.93 apiece, around their highest price in over a month as global markets stage a recovery following a rout of volatility.

Does New Hope offer a tempting buy for income-seeking investors, or should one stay clear? Let's dive in and see.

ASX dividend share takes a hit

New Hope's share price has been under pressure in 2025 as global markets endured a sharp sell-off in April and the price of coal declined.

The black rock is trading at US$99 per tonne at the time of writing, a sharp fall from its high of US$157 per tonne in October last year.

Behind the price weakness in coal? According to Trading Economics, weaker demand, both thanks to renewable energy and slower sales in major consumer China.

[Coal] futures were down 20% this year amid an increasing share of power generation from renewable sources and lower demand for heating due to a warmer Chinese winter. Consequently, Chinese fossil-fuel power output dropped by 4.7% annually in the first quarter, driving imports of thermal coal to sink 13.1% annually to 91.5 million tons in the year to April.

Despite the price weakness, analysts believe this ASX dividend share has strong income-generating potential.

And this is important, because New Hope is known for paying fat, chunky dividends to investors when it matters. That is, in the good times, and the bad.

Recall that the company operates some of Australia's key thermal coal mines. Even as prices have fluctuated significantly over the last few years, New Hope has consistently paid a stream of healthy dividends each year.

See for yourself below:

A 10% yield still on offer?

Not quite. This ASX dividend share pays a 10% trailing yield, meaning that figure is pegged to the current share price and the trailing 12-month dividend.

At a share price of $3.93, and having paid around 41 cents per share in dividends over this time, the prevailing yield is about 10.4%, excluding any franking credits.

What matters for investors interested in buying New Hope today is the forward yield, the estimated dividends compared to the current stock price.

The consensus of analyst estimates puts this at 27.1 cents per share this year, and 27 cents per share in 2026, according to CommSec.

Say that view is correct, and say an investor bought this ASX dividend share at $3.94 each today, that equates to forward yields of about 7% in both of those years.

Not bad, but not 10% either. Note, these figures exclude any impact from franking credits, which, when combined, could certainly bring the forward yield above that mark.

Time will tell if New Hope surprises to the upside with a higher forward payout, or if the price of coal surges higher, giving New Hope more free cash flow to disburse to investors.

But for now, this ASX dividend share looks set to pay a 7% un-grossed yield at today's share price and consensus dividend estimates.

Foolish Takeaway

This ASX dividend share has had a difficult start to the year, but it still offers a respectable dividend yield for investors to consider.

Is it still above 10%? At current prices and forward estimates, and excluding franking credits, then no. It is currently around the 7% yield mark moving forward.

As a reminder, this is still a highly respective yield in the context of dividend payouts. Current rates on term deposits are less than 5%, with no potential for capital gains or reinvestment.

The post Down 22% this year, does this ASX dividend share still offer investors a 10% yield? appeared first on The Motley Fool Australia.

More reading

• Why this ASX coal stock just jumped and keeps on surging
• Why is everyone talking about New Hope, PLS and Viva Energy shares on Thursday?
• New Hope launches $300m convertible notes offer and buyback
• Why I'm even more bullish about Soul Patts shares from now on!
• ASX 200 energy shares whipsaw amid fragile ceasefire

Motley Fool contributor Zach Bristow 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.

BHP Group Ltd (ASX: BHP) shares are under the microscope this month, as ASX large-cap stocks catch a revitalising bid following a turbulent few months of trade.

Shares in the mining giant slumped to six-month lows of $34.16 apiece in April, as global markets saw a large unwind thanks to geopolitical uncertainty regarding US-China relations.

They have since reclaimed these losses and are trading at their highest mark in over a month.

Despite this, top brokers have mixed opinions about the mining giant's prospects. So, what's the latest on BHP shares according to analysts? Let's dive in.

BHP shares: Broker ratings and price targets

After a dip in its share price, BHP shares are currently swapping hands at around $39.50. And while the market has seen its ups and downs, brokers have varied opinions on BHP's future, with some seeing potential upside and others forecasting caution.

According to CommSec, the consensus of analyst estimates rates BHP shares a buy. The consensus includes 13 bullish brokers, seven holds, and none recommending selling the stock.

Meanwhile, the consensus price target is $43.40 apiece as per Tradingview, excluding any impact from dividends.

As for dividends, consensus also has the mining giant to throw off $1.39 per share in income to shareholders this year, settling to $1.35 in 2026.

This equates to yields of 3.5% for both years, respectively, at the time of writing.

In April, UBS brokers set a price target of $40 on BHP shares, rating them a hold at the time. But, UBS also downgraded its outlook for 2025 and 2026 due to potential risks in the copper and iron ore markets.

Goldman Sachs is slightly more bullish on the mining giant. It has a valuation of $45.10 on the miner, baking in an additional $1.57 per share in dividends on top of this.

It reckons BHP could see its copper earnings grow by $5 billion by FY26.

On its US listing, Citigroup analyst Paul Mctaggart and Argus Research's John Eade have buy ratings on BHP shares as well.

Whereas Barclays, RBC Capital, and Berenberg Bank are in the hold camp at the time of writing.

Factors driving BHP's performance

Arguably, the biggest factor underlying the performance of BHP shares is the price of iron ore. It has been on a downward trend this past year, currently fetching US$100.42 per tonne versus $117 per tonne this time last year.

According to OilPrice.com, futures contracts on iron ore "increased sharply" this week as the US and China look to have made a deal on tariffs.

Following the announcement, the September contract on the DCE went up 7.185% to roughly US $99.2 (718.5 yuan) per ton. Coke and coking coal futures also saw gains, rising 0.75% and 0.68% to about $203 (1,471.5 yuan) and $123 (889.5 yuan) per ton, respectively.

BHP's Western Australia iron ore production held steady at 68 million tonnes in the first quarter. What impact this has long term on BHP shares, we can only speculate.

Foolish Takeaway

BHP shares have faced challenges already this year, but brokers have mixed opinions on the mining giant. While the consensus view leans towards bullish, there's a draught of cautiousness swirling about the hallways of the ASX when it comes to BHP.

The stock is up 9% in the past month.

The post What's the latest broker ratings on BHP shares? appeared first on The Motley Fool Australia.

More reading

• What are brokers predicting for BHP shares over the next 12 months?
• Should you buy BHP shares ahead of the miner's production update?
• Buy, hold, or sell? Coles, Wesfarmers, BHP shares
• Forget BHP shares! Buy these ASX dividend shares instead for passive income
• Where I'd invest on the ASX for passive income right now

Citigroup is an advertising partner of Motley Fool Money. Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Aristocrat Leisure Ltd (ASX: ALL) shares were hammered in Wednesday's trade, sliding 13% to finish the session at $59.07 apiece.

The catalyst? The gaming giant's half-year results, also posted yesterday, which came in well behind consensus expectations.

This brings losses for the year to 8% at the time of writing, with shares currently swapping hands at $63.05 – a far cry from its six-month highs of $78.51 in mid-February.

But despite the sell-off, analysts at Macquarie have maintained the bank's buy rating on Aristocrat shares.

So, how should investors approach the stock? Let's dive in and see.

Aristocrat shares dive on H1 earnings

In its 1h25 results, Aristocrat reported a 6% year-on-year increase in net profit to $733 million from revenues of $3 billion, up 9%.

This was below expectations, despite Aristocrat reporting an 18% increase in operating cash flow to nearly $775 million.

The company also confirmed it authorised a new $750 million share buyback program. This, having just completed a $1.85 billion repurchase of its own stock in the last period.

Despite the minor setback in earnings, one takeout was its gaming operations in North America. The region remains a key driver of growth for the company.

It booked an increase of 4,800 gaming machines to its installed base, which management expects to push an "acceleration in operating momentum" in H2, as it embarks on "product rollout and technology initiatives" in its portfolio.

Growth outlook tempered

After Aristocrat shares fell sharply, brokers at Macquarie were quick to update their forecasts on the gaming company. They lowered the firm's growth outlook for revenue and net profit.

We now forecast A$1,533m FY25 continuing ops NPATA, implying +7% yoy growth (+4% constant-FX), but is A$129m / 8% below our prior forecast…

…We see Aristocrat returning to net-cash in FY26 (currently A$425m net debt), supported by cash-generation, whilst undertaking annual share buy-backs of around A$750m. M&A remains a key talking point, with any acquisition to be within the current verticals, and to accelerate growth.

Macquarie's revised forecast now projects a price target of $70 per share. This reflects "a 13% premium vs ASX 300 Industrials", but it is down from a previous $75 valuation.

Concerns around potential slowdowns in US casino revenues due to pressure on consumer spending also fed into the more cautious outlook on Aristocrat shares.

Fellow broker Goldman Sachs also weighed in yesterday, reiterating its buy rating with a $74 per share target on the stock, also lower from a previous $76.80.

It says Aristocrat shares are well positioned thanks to the company's growth initiatives, where it expects "a strong 2H25 recovery with NSW/QLD launches in Apr/May driving close to 50% ship share."

Foolish Takeaway

Aristocrat shares have been heavily sold this week after the company posted its H1 FY25 earnings, which missed expectations.

Despite this, brokers Macquarie and Goldman Sachs still tip the stock as a buy, valuing it at $70 and $74, respectively.

Only time will tell what happens from here. But Aristocrat shares are also currently trading at nearly 33 times earnings, meaning investors pay $33 for every $1 of the company's profits, up from a multiple of 19x and 20x in 2023 and 2024, respectively. I'd urge investors to keep this in mind.

The post After a 13% slump, what does Macquarie think of Aristocrat shares? appeared first on The Motley Fool Australia.

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• Down 20%, are these ASX gaming stocks ready to surge?
• Consumer discretionary shares to target for a long-term rebound

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Coles Group Ltd (ASX: COL) shares have made an impressive start during the first half of 2025, with the supermarket giant's stock rising 13% since January.

After the psychotic volatility in global markets these past few months, investors have bid Coles stock up from a March low of $18.47 to a close of $21.33 apiece following Wednesday's session. Last week, they nudged a new high when closing at $22.48 apiece.

But can this momentum continue? Let's break down what analysts think and what could drive Coles' stock even higher.

Coles shares rally into May

Coles' performance has been notable in recent months, both on its stock price chart and the underlying business.

In its Q3 FY25 update, the supermarket giant reported a nearly 3.5% increase in group sales revenue, totalling $10.4 billion.

Its supermarkets division continued to lead, with sales up 4%. Excluding tobacco, supermarket sales grew by almost 5%.

One takeout was Coles' online business, with eCommerce sales surging more than 25% year over year to reach over $1 billion. At the time of writing, that's about 3.5% of the company's market capitalisation of $28.6 billion.

For a company producing this amount of market capitalisation in revenue for a single division, investors are now paying nearly $26 for every $1 of trailing profits to buy Coles shares, with a price-to-earnings (P/E) ratio of 26x.

According to Commsec figures, this is more than 40% higher than the company's average annual P/E of 18.8x during the calendar year 2024 and higher than any average annual P/E going back to 2019.

Analysts are still bullish on Coles

Despite a slight dip in Coles shares following its quarterly update, brokers still project further upside for the supermarket giant in capital gains and dividends.

Macquarie Group has maintained its buy rating for Coles and set a 12-month price target of $23.10 per share. This implies a potential upside of around 8% from its current price of $21.33 before the open on Thursday.

The broker says the company is benefiting from initiatives like its Automated Distribution Centres and investment to meet customer demand, factors which could inflect positively on Coles shares.

Meanwhile, according to Commsec, the consensus broker opinion rates Coles a buy, and the average price target is $21.33, as per TradingView.

The consensus view also projects Coles to produce around 94 cents per share in earnings in 2026, and dividends of 75.6 cents, which is a forward yield of 3.5% at the time of writing.

Foolish Takeaway

With a solid base in both physical and online retail, brokers project that Coles shares could continue to rise over the next 12 months.

As a side note, I would urge investors to pay attention to the current valuation of 26x P/E, which, according to the data, is expensive relative to the company's history.

Ultimately, time will tell what happens from here.

The post Up 13% this year, could Coles shares still go higher? appeared first on The Motley Fool Australia.

More reading

• Buy, hold, or sell? Coles, Wesfarmers, BHP shares
• Where I'd invest on the ASX for passive income right now
• 3 reasons to buy Coles shares today
• BHP vs Coles shares: Which is the better buy this week?
• Is the Coles share price an opportunity too good to pass up?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Coles Group and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The debate between Washington H. Soul Pattinson & Co Ltd (ASX: SOL) and Brickworks Ltd (ASX: BKW) shares have kicked off here at Fool central, having sparked interest among investors seeking value in 2025.

Both companies are well-established blue-chip stocks with diverse portfolios. But the key question remains: Which one represents the better value at this point in time?

Let's dive in and see what the experts –and the data – have to say.

Are Brickworks shares a buy?

Brickworks is primarily known for its building materials division. In a market dominated by global uncertainty, the stock has shown some resilience due to its diversified business model.

With the benchmark S&P/ASX 200 Index (ASX: XJO) up less than 2% this year after an 8% rise this past month, Brickworks shares have lifted 12% in the past month and held an 8% gain this year.

Apart from its brick manufacturing business, the company also has exposure to industrial property developments in the United States.

Bell Potter analysts rate Brickworks a buy as of April, setting a target price of $32 apiece. This reflects 14% potential upside from its price of $27.66 at the time of writing.

It also sells at a price-to-earnings ratio (P/E) of 11x, meaning it is valued at 11 times net profit, or $11 for every $1 in earnings.

In my view, investors looking for capital growth alongside reliable dividend income might be drawn to the name.

Soul Patts: Diversified conglomerate

On the other hand, Washington H. Soul Pattinson (I'll just call it Soul Patts from here on) provides exposure to a wide array of industries.

As a diversified investment conglomerate, that means Soul Patts holds stakes in several prominent ASX companies.

Some of these include coal miner New Hope Corporation Ltd (ASX: NHC), telecom giant TPG Telecom Ltd (ASX: TPG), and Macquarie Group Ltd (ASX: MQG).

And just like Brickworks shares, Soul Patts shares have outperformed the index and are up nearly 9% this year.

Soul Patts has a strong reputation for dividend growth. As my colleague Tristan covered, it has increased its annual payout every year since 2000. That's nearly 25 years.

The company currently pays a dividend yield of about 2.7%, excluding any franking credits. It is also rated a buy from the consensus of analyst opinions, according to CommSec.

Despite its solid dividend history and broad asset base, the consensus target price for Soul Patts is $36.20 according to Tradingview, slightly below its current share price of $37.21.

It also trades at a higher P/E ratio of 26x, meaning investor expectations are high for this 120-year-old giant.

That said, you're paying a premium vs. Brickworks in this instance.

Final Takeaway

When comparing the two stocks, the most glaring difference is their valuation.

Brickworks' current P/E ratio is 11x, compared to Soul Patts' significantly higher P/E ratio of 26x. Considering all the facts, I believe Brickworks is worth a closer look for investors seeking value.

The interesting point in this debate is that both companies, Brickworks and Soul Patts, respectively, own sizeable stakes in one another.

Soul Patts owns around 40% of its counterpart, whereas Brickworks owns 26%. So, you're getting exposure to both names by owning either company anyway.

Ultimately, your choice between these two blue-chip stocks will depend on your personal investment goals, risk tolerance, and time horizon.

The post Which is better value right now, Soul Patts or Brickworks shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, Macquarie Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Macquarie Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.