OUR QUEST IS NOT TO BE BULLISH OR BEARISH, BUT TO CORRECTLY ASSESS FUTURE TRENDS

Macquarie rates BAP as Neutral

Bapcor announced a downgrade, cutting FY26 earnings (EBITDA) guidance by around -5% at the midpoint due to challenging trading conditions arising from higher interest rates and the Middle East war, Macquarie articulates.

Positively, the analyst highlights like-for-like sales grew between February and April including trade up 0.7%, networks up 3.8%, retail up 1.6% and NZ up 0.7%.

The trend deteriorated over the course of April with weaker conditions now expected to remain over FY26 as lower consumer and business confidence weigh on consumer sentiment. Higher costs and the depreciation of the NZ dollar are also headwinds.

Management improved the debt position, with pro forma net debt around $168m from circa $195m at the end of December.

EPS forecasts are cut by -39% for FY26 and -38% for FY27. Target price moves down to 44c from 61c. No change to Neutral rating.

Citi rates WOR as Buy

Citi suggests Worley's target of delivering double-digit earnings (EBITA) compound annual growth rate (CAGR) to FY30 is ambitious relative to consensus, with execution key to achieving this outcome.

While management at yesterday's investor day highlighted tailwinds across the core business, adjacent growth areas and potential AI benefits, investor sentiment remains cautious, the analyst highlights.

Commentary notes concerns revolve around cost-out sustainability, project delays and management credibility.

Citi believes improving industry dynamics should support margins and contract terms, and continues to view the stock as undervalued.

Buy rating. Target is lowered to $13.60 from $14.00.

Morgans rates XRO as Buy

Morgans observes earnings momentum for Xero continues to improve, with FY26 results beating estimates and adjusted EBITDA up 23%. The main issue, the broker contends, is whether AI is more an opportunity or a threat for the company.

Integration with leading large language models appears to "have spooked" some investors, yet management asserts this will grow its total addressable market and medium-term monetisation.

Morgans concludes it is early days for AI, although management appears confident enough to have announced a buyback and hint at potential capital management in FY28. Buy rating maintained along with an $111 target.