Jefferies has adjusted its stance on Monadelphous Group Limited (MND: AU) (OTC: MDPHF), downgrading the stock from Buy to Hold and lowering the price target to AUD12.60 from the previous AUD15.50. The revision follows Monadelphous's revenue performance, which surpassed its fiscal year 2024 guidance.
Monadelphous reported a revenue growth exceeding the forecasted 10% on a per cent per comparison (pcp) basis, aligning with Jefferies's estimate of 11% pcp. The company's EBITDA margins also exceeded expectations by 2%. The Engineering & Construction (E&C) sector was a significant contributor to this margin improvement, a trend expected to persist into FY25.
The firm noted that the Pilbara Iron Ore spending will likely support the growth of E&C and Maintenance & Industrial Services (M&I) in FY25, with a low single-digit percentage increase anticipated. However, the Battery Materials sector poses a risk, accounting for 38% of E&C revenue and 19% of M&I revenue.
Jefferies highlighted the absence of quantitative guidance for the future and expressed uncertainty regarding FY26. Consequently, the firm has revised its earnings per share (EPS) estimates for FY25 and FY26, with a 1% decrease for FY25 and an 8% decrease for FY26.
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