In Brief: South32, Telix & Generation Development

Weekly Reports | Jul 25 2025

A mixed bag for this week's In Brief, good and bad news characterised quarterly updates for a miner, biotech and wealth manager.

-South32: Diverging Views on Strong Quarter Despite Mozal Uncertainty
-Telix Pharmaceuticals Faces SEC Subpoena Amid Pricing Pressures
-Generation Development Posts Record Inflows, Tax Policy Tailwinds Build

By Danielle Ecuyer

This week’s quote comes from Carolina Pinto, Strategic Intelligence Analyst at GlobalData:

"The uncertainty and unpredictability of US tariff policy is discouraging companies from making any long-term investment decisions.

"Instead, most companies intend to wait for the tariff situation to stabilize before finalizing any strategic shifts to their supply chains."

Mozal's energy contract the big uncertainty 

It has been a big week for quarterly updates with South32 ((S32)) coming into our line of vision for In Brief this week with two contrasting takes on the report from non-daily monitored brokers. As our editor likes to say “that’s what makes a market”.

Barrenjoey sees the glass half full, with production well above forecasts in all segments excluding alumina. Group copper production came in 9% above consensus with both sales volumes and pricing better than expected. Unit costs were in line with guidance.

A winding back of working capital, some -US$225m, resulted in estimated realised cash at quarter end of US$193m, US$90m higher than prior forecast. Capex for FY25 of US$917m was lower than consensus by -US$82m.

Canaccord Genuity observed South32’s operating metrics for the June quarter were within guidance and mostly in line with the broker’s expectations.

Alumina and copper production were as anticipated with silver slightly below, aluminium marginally ahead and nickel described as a “beat” at 9.7kt against Canaccord’s forecast of 8.7kt and consensus at 8.5kt.

Manganese volumes were also much better at 1060kwmt versus consensus at 873kwmt and the analyst at 861kwmt.

While investors are expected to be positive about the manganese result, Canaccord cautions the pricing environment is likely to offset the volumes.

Higher production costs in aluminium are also likely to negate the robust performance from alumina. In contrast, Barrenjoey explains the higher realised pricing in alumina means an increase in smelting costs but on balance South32 sees an “aggregate benefit” given the net long alumina position.

Canaccord remains cautious on the potential production loss at Mozal when the existing power agreement expires in March 2026. The base case is for an extension, however, until such time as when it is confirmed, FY26 earnings forecasts remain under review.

Canaccord retains a target price of $2.60 and a Hold rating.

Barrenjoey raises its FY25 earnings estimate by 13% due to the stronger sales volumes and higher realised prices. Management has slightly lowered FY26 guidance at Brazil alumina and Sierra Gorda by -1% and -2%, respectively. With Mozal guidance under review due to power contract uncertainty.

Barrenjoey tweaks FY26-FY27 earnings estimates for higher costs in aluminium and Cannington (silver). Target price is raised to $3.95 from $3.90 with an Overweight rating retained.

FNArena's daily monitored brokers generate a consensus target price of $3.60 with two Hold-equivalent ratings and four Buy-equivalent ratings.

A mixed quarterly update and a surprise from the SEC upset the apple cart

Biotech Telix Pharmaceuticals ((TLX)) has been a market darling but an unexpected subpoena from the SEC, which coincided with a June quarter update, saw the shares decline just over -10% this week.

Wilsons notes unaudited revenue for 2Q2025 of US$204m including US$154m from global Illuccix sales was below the analyst’s forecast of 5% growth due to a more challenging pricing environment in the US and slower commercial rest of world sales, including the European launch.

The company pointed to US Illuccix’s dose volumes rising 7% for the period on the previous quarter, implying a decline in average selling price of -5%.

Channel checks suggest to Wilsons, the market leader Lantheus remains “aggressive” offering significant rebates in return for ‘share of practice’ targets for large accounts. More will be revealed next week when Lantheus reports its 2Q2025 results.

Excluding the US market, Illuccix sales remain below forecasts resulting from uncertainty across launches in Europe.

Jarden highlights Telix’s 1H2025 group revenue as 4.1% higher than forecast with 1H2025 global Illuccix also in line, composed of US Illuccix sales better than expected by 5.2% and EU sales missing expectations.

This analyst also points to pricing pressure for US Illuccix due to competition and discounting which are likely to continue into 3Q2025 as Illuccix moves off transitional pass-through payment and is reimbursed at a lower rate.

Both brokers concur RLS radiopharmacies performed above estimates. According to Jarden, 1H2025 revenue was 15.8% above forecast.

Management re-affirmed 2025 revenue guidance of US$770-US$800m which includes an eleven-month contribution from RLS. R&D 2025 guidance stands at growth between 20%-25%.

The “unfortunate” subpoena from the SEC seeking documents in relation to Telix’s disclosures for its Prostate Therapeutic candidates will see management cooperate fully. The information request does not apply to its diagnostic tests with the biotech continuing with its clinical development programs related to prostate cancer therapy.

Jarden retains a Buy rating with $29.14 target price. Wilsons is reviewing earnings forecasts noting 1H2025 results are due out on August 21.

The transition to USD reporting is expected to create some disparity on consensus estimates, the latter analyst highlights, with the market also believed to be underestimating general and administrative expense growth in the medium term.

FNArena's two daily monitored brokers underpin a consensus target price of $35 with two Buy ratings.

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