Treasure Chest: ASX

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FNArena's Treasure Chest reports on money making ideas from stockbrokers and other experts. Today's idea is the ASX.

By Danielle Ecuyer

FNArena’s Treasure Chest reports on money making ideas from stockbrokers and other experts.

Whose Idea Is It?

JP Morgan

The subject:

JP Morgan believes the ASX ((ASX)) is approaching an inflection point after resetting costs and addressing key regulatory issues, although successful execution of the CHESS replacement and the new CEO’s strategy remain critical.

More info:

Is the once-stalwart stock of private investors set to make a comeback?

The ASX is heading into its FY26 result following another challenging second half period.

The shares are down around -19% since the start of 2026 while the ASX200 index has risen around 7.6%.

Unfavourable regulatory decisions, a sharply higher cost base, and ongoing leadership changes have weighed on investor sentiment and earnings.

JP Morgan believes the proverbial “ship is turning” for ASX, citing four key factors.

Ahead of the arrival of the new CEO, FY27 cost guidance was rebased at significantly higher levels, which the broker describes as “extraordinarily high”.

Guidance increased by 18%-21%, or 13%-16% excluding depreciation and amortisation, implying underlying cost growth of around 28% once the -$35m of inquiry costs roll off in FY26.

Capital expenditure guidance was also lifted to $180m-$200m in FY27 and $170m-$190m in FY28 as technology investment, inflation and product spending remain elevated.

JP Morgan believes management has effectively adopted a “kitchen sink” approach by recognising as many future costs as possible ahead of the new CEO’s arrival.

The broker sees this as de-risking the business and reducing the likelihood of further cost guidance increases under the incoming leadership.

That said, the analyst acknowledges consensus FY27 earnings forecasts may not yet fully reflect the higher cost base, while another delay to the CHESS replacement remains a key risk.

For Jarden, the recent share price “dislocation” has equally created an attractive entry point.

In late May, when the shares were trading around $45, Jarden upgraded ASX to Overweight from Neutral after the appointment of Anthony Attia as CEO came sooner than expected.

In addition, ASX management provided what this broker considered sufficiently conservative cost guidance to encompass the technology modernisation program.

The remaining uncertainty is the entry of TMX into Australia.

UBS is also constructive, arguing the June activity report capped a robust second half for ASX’s core trading business.

Average daily futures volumes and cash equity turnover rose 21% and 22%, respectively, on the previous year.

Equity turnover growth of 24% year-on-year exceeded consensus expectations of 18%, while futures volume growth of 18% compared with consensus forecasts of 13%.

Capital raisings remained subdued at $3.3bn in June versus $11bn a year earlier, while collateral balances fell -17% year-on-year to $10.1bn.

Citi also highlights the strength of the core business, noting average daily cash equity turnover of $9.5bn during the half was 49% above the 10-year median.

While this broker believes the ASIC legal settlement and greater transparency around the Accelerate program have reduced tail risks, it is waiting for the incoming CEO to outline a broader strategic direction.

Neutral rated, Citi has lifted its target price to $56.

Macquarie remains cautious. Following the June trading update, this broker lowered its target price to $51 from $54 after reducing the payout ratio in its dividend discount model to reflect a forecast shortfall in excess capital in FY28.

Although the ASX is trading on around 19.9 times 12-month forward earnings, around -16.4% below its three-year average, Macquarie believes the modest valuation discount is justified given uncertainty surrounding operating costs, capital expenditure, the CHESS replacement and the incoming CEO.

Neutral rated.

Morgans strikes a similar tone, citing the financial and regulatory risks surrounding ASX’s large-scale technology projects. Morgans retains a Hold rating and lifts its target price to $53.90 from $51.50.

Broker opinions ultimately remains divided. UBS, JP Morgan and Jarden believe investors are increasingly being compensated for the execution risks, while Citi, Macquarie and Morgans remain more cautious until Anthony Attia outlines a clearer strategic direction.

JP Morgan has raised its target price to $58 from $57, although this remains below its discounted cash flow valuation of $61.07 to reflect ongoing regulatory and execution risks.

UBS has the highest target price at $62 and retains a Buy rating, forecasting a “robust” 6% EPS CAGR beyond FY27.

FNArena’s consensus target price, derived from six daily monitored brokers, is $54.375 with one Buy (UBS), four Hold-equivalent ratings and one Sell-equivalent rating from Morgan Stanley.

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