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

Macquarie rates CPU as Neutral

Macquarie considers Computershare's FY27 earnings guidance conservative following yesterday's AGM update. Margin income guidance was raised by US$35m to US$805m while EPS guidance was maintained.

The broker expects an earnings upgrade at the February interim result, noting stronger-than-expected margin income despite unchanged average client balance guidance.

Operating margins are improving, the analyst highlights, while corporate trust activity and employee share plan trading remain supportive.

Elsewhere, the corporate actions pipeline is moderating and valuation is stretched, according to Macquarie.

Target $38. Neutral.

Citi rates ORI as Buy

On further inspection, post the initial observations below, Citi sees FY27 as a "cleaner" year with fewer significant items. Growth is expected to continue against continuing turnarounds and higher investment.

The broker remains Buy rated and flags the stock is expected to outperform into the upcoming investor day, a potential catalyst. Target price is lifted to $26.95 from $25.40.

At first look, Orica's FY26 EBIT came in 2% better than consensus, due to stronger performances from Digital and Specialty Chemicals, while Blasting was broadly in line.

Citi highlights weaker cash flow, down -20% y/y, reflecting -$344m in significant items, with net debt rising to 1.46x.

Blasting EBIT was marginally ahead of consensus, although the analyst queries earnings quality given around -$20m in US supply disruption costs appear to have been excluded from underlying earnings in 2H26.

Digital EBIT beat consensus by 4%, supported by revenue growth of 16% y/y, while Specialty Chemicals EBIT of $126m was 6% ahead, benefiting from 9% higher sodium cyanide volumes.

The broker expects minimal to low-single-digit NPAT revisions for FY27, with uncertainty remaining around US supply disruptions and their earnings treatment. Buy. Target $25.40.

Macquarie rates XRO as Outperform

Macquarie explains Xero's 1H27 result supported the positive outlook, with revenue growth of 23% y/y (CC) boosted by accelerating Melio payments revenue and improving operating leverage.

Management now expects to achieve the Rule of 40 in FY27, 12 months ahead of schedule, with FY28 aspirations upgraded.

The analyst highlights AI is viewed as additive rather than disruptive, with 1m customers using AI features and engineering productivity improving 2.5 times.

Macquarie sees opportunities to monetise AI through bundled features, consumption-based pricing and customised solutions, supported by Xero's proprietary accounting data and established customer relationships, the broker explains.

Adjusted EPS forecasts rise 9%/2%/4% for FY27–FY29, due by higher payments revenue, lower Melio costs and the $1bn buyback.

Target price is raised to $161.80 from $158.50.