Last Update 08 Mar 26

ASX: Neutral Upgrades And Revenue Trends Will Support Future Upside Potential

Analysts have lifted their ASX price target by A$0.00 to A$58.93, citing slightly refined assumptions for discount rate, revenue growth and profit margin. These changes keep the long term outlook broadly unchanged.

Analyst Commentary

Recent research updates, including upgrades from JPMorgan and Goldman Sachs, show that views on ASX are becoming more balanced, with attention on how current activity levels and pricing feed into revenue and valuation.

Bullish Takeaways

JPMorgan's upgrade signals growing confidence that ASX's current setup can support the refined valuation framework around A$58.93, even with only modest changes to key assumptions.
Bullish analysts point to company activity and pricing as supportive for revenue trends, which they see as helping underpin earnings quality rather than relying on aggressive growth assumptions.
The A$57 price target cited by Goldman Sachs and the A$58.93 target used in this model sit in a relatively tight range. Bullish analysts view this as validation that the market has a clearer handle on fair value.
Moving from a Sell to Neutral stance at a major global bank reduces the overhang of strongly negative sentiment and suggests that execution risks are, for now, seen as more balanced than skewed to the downside.

Bearish Takeaways

Despite the upgrade to Neutral, some bearish analysts may still see limited upside from current levels, given that the latest A$58.93 target is only marginally above the A$57 reference point and was adjusted by A$0.00.
The reliance on activity and pricing to support revenue can cut both ways. More cautious analysts are likely to flag that any change in these drivers could quickly affect earnings and justify only restrained valuation assumptions.
The shift to Neutral rather than Buy at Goldman Sachs suggests that while downside concerns have eased, analysts still see meaningful execution and growth questions that keep them from taking a more optimistic stance.
Refined assumptions around discount rate and profit margin, without a material change in target price, indicate that bearish analysts may still be conservative on long term profitability and are not building in aggressive improvement scenarios.

What's in the News

ASX Limited announced a first half 2026 interim dividend of 101.8 A$ cents, described as 8.5% lower than the prior comparable period, with a payout ratio of 75.0% of underlying net profit after tax versus 85% previously. The dividend is scheduled for payment on 23 March 2026 and will be fully franked (Key Developments).
CEO Helen Lofthouse is set to step down in May 2026 after an 11 year career at ASX. Her departure was announced as the group prepares for the first phase of the CHESS project, which is targeting go live in April 2026 (Key Developments).
The Board has engaged Korn Ferry to run a global search for the next CEO, with internal candidates also to be considered, as ASX moves into what it describes as the next phase of its transformation and technology modernisation program (Key Developments).

Valuation Changes

Fair Value: A$58.93 is unchanged, with the updated model keeping the same central estimate as before.
Discount Rate: Trimmed slightly from 7.72% to 7.69%, indicating a small adjustment to the required return used in the model.
Revenue Growth: Held essentially flat, remaining at 4.64%, so the growth outlook built into the valuation is broadly consistent with prior assumptions.
Profit Margin: Edged up marginally, staying at 40.28%, reflecting a very small uplift in assumed profitability.
Future P/E: Eased slightly from 26.14x to 26.12x, pointing to a near-identical earnings multiple in the refreshed analysis.

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Key Takeaways

Growth in technology and data services, alongside market participation, supports diversified and recurring income, driving margin and earnings stability.
Technology modernization and regulated pricing enhance operational efficiency and net profit stability, mitigating risks from competition and regulatory changes.
Rising costs, regulatory scrutiny, execution risks, increased competition, and industry shifts threaten ASX's profit margins, revenue growth, and long-term market dominance.

Catalysts

About ASX

Operates as a multi-asset class and integrated exchange company in Australia and internationally.What are the underlying business or industry changes driving this perspective?

Strong growth in operating revenue from markets, data, and securities/payments businesses, combined with continued product and data innovation (e.g., new debt market and trading activity data products, accelerated technology modernisation, launch of scalable infrastructure-as-a-service solutions), positions ASX to capture ongoing revenue growth from increased digitization and financialization of the economy-particularly as retail and institutional participation rises.
Positive momentum in net new capital quoted and increased IPO and secondary listing activity, supported by growth in Australian household wealth and superannuation assets, suggest sustained upward pressure on trading volumes and listing revenues as long-term domestic capital pools expand, translating into higher recurring revenues.
Expansion and demand in high-margin technology and data offerings-driven by appetite for analytics, connectivity, and market information from both domestic and global market participants-provides opportunity for recurring, diversified non-transactional income, supporting overall margin expansion and earnings stability.
Progress on the multi-year technology modernization road map, including the upcoming go-live of the new CHESS settlement system, underpins operational efficiency, risk management, and resilience, which should lower costs, improve customer experience, and ultimately expand net margins over the medium term.
Implementation of regulated infrastructure pricing models (building block approach) for core clearing/settlement business provides predictable and stable targeted returns on allocated capital, limiting downside margin risk from potential fee competition or regulatory intervention, and supporting long-term net profit stability.

ASX Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming ASX's revenue will grow by 4.9% annually over the next 3 years.
Analysts assume that profit margins will shrink from 45.0% today to 42.5% in 3 years time.
Analysts expect earnings to reach A$547.2 million (and earnings per share of A$2.85) by about September 2028, up from A$502.6 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 29.5x on those 2028 earnings, up from 23.7x today. This future PE is greater than the current PE for the AU Capital Markets industry at 21.6x.
Analysts expect the number of shares outstanding to grow by 0.22% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.62%, as per the Simply Wall St company report.

ASX Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Rising cost pressures-particularly from technology, regulatory compliance, and project-related headcount-are driving expense growth well above inflation (guidance of 8–11% core business expense growth for FY26, and 14–19% including ASIC inquiry costs), which could compress net profit margins and limit earnings growth if revenues do not keep pace.
Intensifying regulatory scrutiny, highlighted by the ongoing ASIC compliance assessment and inquiry, could lead to recommendations or requirements for costly further investment in risk management, governance, and capability, or even tighter oversight and fee regulation, negatively impacting both costs and revenue flexibility in the long term.
Execution risk remains high around the ongoing technology modernization and CHESS replacement programs, with management admitting the business is "not where we want to be" on operational risk and resilience; delays or failures in key projects could increase costs, damage reputation, and potentially lead to client attrition or market share loss, directly hurting revenues and margins.
Competitive pressures are escalating, especially with the potential entry of Cboe Australia as a listings market and the broader choice of global and domestic exchanges for new listings and capital; this could erode ASX's historic listing fee revenues and force more aggressive pricing or incentives, impacting revenue growth from its listings business.
Fee compression and industry-wide shifts, such as the migration of activity to lower-cost alternatives, increased digitalization, and the threat from alternative financial infrastructure or decentralized platforms, put long-term pressure on ASX's ability to sustain high margins and premium valuation, raising risks to both top-line revenue and recurring non-transactional income streams.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of A$66.512 for ASX based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$77.0, and the most bearish reporting a price target of just A$54.05.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be A$1.3 billion, earnings will come to A$547.2 million, and it would be trading on a PE ratio of 29.5x, assuming you use a discount rate of 7.6%.
Given the current share price of A$61.26, the analyst price target of A$66.51 is 7.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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