Update shared on16 Sep 2025
Fair value Increased 3.91%Downer EDI's consensus analyst price target has increased to A$7.08, reflecting analysts’ confidence in significant cost reductions, improved operational performance from contract removals, completion of portfolio rationalisation, and underappreciated growth opportunities, driving expectations for stronger earnings and business focus.
Analyst Commentary
- Significant cost reductions of approximately A$200M achieved through contract and joint venture divestments.
- Expiry and removal of underperforming contracts expected to improve operational performance.
- Completion of portfolio rationalisation ("garage sale is over") signals a more focused business going forward.
- Opportunities for growth in Australia and New Zealand seen as underappreciated by the market.
- Bullish analysts have upgraded outlook and raised price target on expectations of earnings improvement and business simplification.
What's in the News
- Awarded a 10-year contract by Urban Utilities to deliver water and wastewater infrastructure in South East Queensland under a collaborative, risk-sharing structure, covering multiple regions.
- Board authorized a share buyback plan, with a program to repurchase up to 33,578,684 shares (5% of shares outstanding) on market; program expires June 2026.
- Declared a fully franked final ordinary dividend of AUD 0.141 per share for the six months ended June 2025.
- Entered a Project Alliance Agreement for a NZD 311 million (AUD 280 million) highway construction project (2NL South) in New Zealand; main construction to commence in Spring 2025.
- Awarded a two-year Integrated Work Package worth approximately $220 million (with extension options) to provide professional services for Defence Joint C4 Systems Branch projects under its existing Defence Major Services Provider contract.
Valuation Changes
Summary of Valuation Changes for Downer EDI
- The Consensus Analyst Price Target has risen slightly from A$6.82 to A$7.08.
- The Future P/E for Downer EDI has significantly risen from 14.55x to 16.02x.
- The Net Profit Margin for Downer EDI has fallen from 3.35% to 3.17%.
Disclaimer
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