Weekly Reports | Oct 10 2025
This week's In Brief presents two stocks which have fallen due to extraneous factors combined with an unexpected technology story.
-Parallels with CSL’s golden era in sight as Telix pivots from setbacks to vertical integration
-Valuation upside and stronger production outlook as Santos re-rates against Woodside
-US Connecticut contract cements Acusensus’ US growth momentum and lifts forecasts
By Danielle Ecuyer
This week’s quote comes from Michael Howell, CrossBorder Capital:
"Global Liquidity is having one of its periodic slowdowns, but overall the upward trend remains intact.
"The 3-month absolute change has dropped back, although it remains in positive territory."
Telix's transition to an end-to-end pharmaceutical company
Oh, the fickle sentiment of investors and collectively markets. Telix Pharmaceuticals ((TLX)) was one of the hottest biotech stocks on the ASX until management hit a few speed bumps.
The share price correspondingly more than halved from February to September, removing the froth and some.
Enter Barrenjoey this week with an initiation of coverage on the stock describing it as “The young, ‘hot’ CSL”.
The analyst believes there are real and tangible similarities between Telix’s business and the future strategies management is pursuing versus those strategies used by CSL ((CSL)) in its now referred to “golden” development period between 2005-2018.
For context, Telix is considered an established radiopharmaceutical company, including what the analyst describes as a profitable franchise in prostate cancer diagnostic agents and imaging, known as Illuccix (sales over $1bn in FY25) and Gozellix, which generate most of its revenues.
There is also a pipeline of diagnostic and therapeutic agents which are at late-stage development, including renal assets which are viewed as under-appreciated.
Recent acquisitions have underpinned Telix' Manufacturing Solutions division in 2H24, boosting its footprint in the US.
Barrenjoey compares the biotech’s vertical integration via further expansion into manufacturing as diversifying revenue streams and creating self-sufficiency in what is believed to be a developing market segment, not unlike what CSL achieved in the blood plasma market.
The vertical expansion lays the groundwork for the business to transcend from a single product biotech to a “vertically integrated end-to-end pharmaceutical” company.
September proved to be a challenging month with two Complete Response Letters issued in which the US FDA denied marketing authorisation to Telix’s brain (Pixclara) and kidney (Zircaix) cancer diagnostics, resulting in a -25% share price decline as investor confidence took a hit.
The reasons for refusal were different. For Pixclara, insufficient clinical evidence was cited, and for Zircaix the issue was manufacturing inadequacies. An agreement for a re-submission alignment for Pixclara has been reached with the FDA.
Meanwhile, an FDA meeting regarding Zircaix is scheduled to occur in 4Q2025. Barrenjoey highlights Zircaix is difficult to manufacture and will be an important test for Telix’s future manufacturing abilities of antibody-based assets, which is a focus for the company.
The stock is Overweight rated with a $22 target price from the analyst.
Consensus target price from FNArena's daily monitored brokers is $28.40 with four Buy-equivalent ratings.
Santos looking unloved after consortium bid collapses
Wilsons is far from the lone voice for a positive take on Santos ((STO)), with the analyst highlighting the stock’s de-rating represents an “attractive buying opportunity”.
Equally, there is a robust potential “pair trade” from selling Woodside Energy Group ((WDS)) and re-investing the funds to Santos due to four factors.
Santos is trading at an appealing valuation and does not rely on bullish price assumptions around the oil price. The stock is trading at circa forward EV/EBITDA of 4.7 times with an implied Brent oil price of US$49.7/bbl or some -24% below the spot price, versus Woodside at 5.2 times comparable ratio and US$58.5/bbl implied Brent price.
The production outlook for Santos is viewed as much better, and the downside risks to the valuation are limited by first gas coming at Barossa and as Pikka is due to come online in early 2026. Both factors are expected to boost free cash flows in the near to medium term.
Secondly, the pipeline delivery is more visible for Santos with Barossa and Pikka Phase 1 largely de-risked. The latter is around 95% complete and first oil has been pulled forward to 1Q26 from 1H26 previously. Management has flagged the two projects will deliver around a 30% increase in production in 2027.
Woodside, in comparison, is weighed down by hefty capex with no production growth anticipated over the medium term.
Wilsons likes Santos’ capital allocation targets as outlined in November 2024 to focus on shareholder returns over investing excess cash flow into capex-heavy growth projects.
The framework target aims for at least 60% of all-in free cash flows to go to shareholders from 2026, versus 40% previously, rising to 100% once gearing declines to the target 15%-25%, slated for 2029.
In comparison, Woodside has made multiple large acquisitions with somewhat uncertain expected internal rates of return versus its traditional oil and gas assets.
Lastly, there is scope for strategic asset sell downs post the commissioning of Pikka, with a positive geopolitical stance from the US Administration for Alaskan oil.
A -50% sell down of Pikka could realise an estimated circa US$1.5bn of cash, which could help finance capital returns to shareholders.
Equally, Wilsons believes Santos’ LNG assets are undervalued by the market. A potential re-rating could be achieved by separating its LNG assets into a business without domestic gas market exposure. In turn, this could prompt interest from global energy companies looking to expand their assets.
Lastly, the analyst emphasises the XRG consortium is believed to have withdrawn its acquisition proposal due to disagreements over the terms of the deal and maintains a positive view on the business.
Santos has an implied value per share of $9.21.
FNArena's daily monitored brokers' consensus target price is $7.767 with four Buy-equivalent ratings, one Hold and one Sell-equivalent.
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