Australia | Nov 21 2025
This story features ALS LIMITED.
For more info SHARE ANALYSIS: ALQ
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS
Rising demand for commodities testing, supported by the soaring gold price, provided a strong first half for ALS Ltd, and it appears there’s more to come.
-ALS Ltd first half beat expectations
-Better than expected growth in minerals testing
-Junior miners set to begin exploration, increasing demand
-Guidance seen as conservative
By Greg Peel
ALS Ltd ((ALQ)) falls within the Testing, Inspection and Certification (TIC) sector, providing laboratory testing across two segments; Commodities and Life Sciences.
The Commodities division provides geochemistry and metallurgy testing of that which miners pull out of the ground at newly developed sites, as well as equipment reliability.
The Life Sciences business provides testing of food, pharmaceuticals and personal care products –-referred to as the “legacy” business-– and the subsequently added environmental testing business (water/air quality, site remediation etc) which has grown to 80% of the Life Sciences segment.
ALS Ltd’s first half FY26 result was ahead of expectations. Profit was up 17% year on year and earnings up 15%.
Divisionally, both Commodities and Life Sciences exceeded expectations, partly offset by higher corporate costs and FX.
Commodities
In the middle quarters of FY25 (March year-end), weaker demand and lower commodities testing volumes forced ALS to discount its pricing, but that trend swung the other way in the final quarter and continued into the first half of FY26 (to September).
While there has been a general increase in volumes across commodities, this year’s surging gold price in particular, along with the copper price, have been primary drivers,
In the Minerals sub-segment, volumes and mix drove a 220 basis point improvement in the margin in the first half. However, this was weighed down by a -120bps impact from pricing as the price discounting from second and third quarters of FY25 continued to wash through.
The good news is those legacy contracts at lower prices have now largely expired.
Importantly, UBS notes, Minerals sample volumes were up low double digits throughout the half, given supportive commodity prices (gold/copper) and demand from onshoring and mineral security trends.
Analysts specifically note volume growth to date is still being driven (75%) by major and mid-tier miners.
Here Come the Juniors
On a trailing 12-month basis, resource capital raisings are up 60%, Macquarie notes. In Morgans’ view, equity raisings are the most powerful key lead indicator for geochemistry sample volumes and therefore the share price of ALS.
Morgans’ data, which the broker notes have reached unprecedented levels over the last few months, imply that volumes will grow 25-35% year on year during the December quarter and will be up around 40% in January.
The data have an 86% correlation with ALS’ sample volumes over nearly a ten-year period, which gives Morgans confidence volumes will be there or thereabouts.
Juniors represented some 20-30% of overall activity levels in the past, Citi notes, so momentum in Geochemistry could increase from here on.
The company has, however, called out that the time lag between capital raised and sample volumes has increased, which makes sense given lengthy approval processes.
Morgans sees this as a timing issue.
Life Sciences
Life Sciences earnings beat by 4% on better margins despite weaker demand in the US and challenges regarding the York acquisition integration, Macquarie notes. US-based York is an environmental testing company with a particular focus on PFAS.
The previously acquired Nuvisan (Europe pharma testing) is finally starting to hit its straps, Macquarie points out, with positive revenue growth and earnings margins up 475bps on a material cost-out.
Life Sciences earnings were up 19% year on year on margins of 15.1% (up 74bps). Excluding acquisitions, margins rose by 57bps, Morgans notes.
Life Sciences’ margin was 30bps higher than assumed as cost-out continued at Nuvisan and legacy Life Sciences operations delivered margin expansion ahead of the 20-40bps FY26 target.
Notwithstanding this strength, the outlook for Life Sciences is considered more mixed. Concerningly for Jarden this appears, at this stage, to be focused on the Environmental business in the Americas (Latam and US) where legacy earnings margins are guided to decline -25bps to -40bps through the second half.
Tempering Jarden’s positive view on the outlook for Commodities is concern that fundamentals have deteriorated for ALS’ legacy Life Sciences business and, more specifically, its Environmental operations. Operating conditions remain challenging and competitive intensity has built, based on Jarden’s assessment of the market.
Brokers aren’t prepared to call it out specifically but clearly Trump’s environmental policies (or lack thereof) and deregulation will impact on demand for testing. Tariffs are also a drag. Then there’s the upending of the US Department of Health, which is not a positive for the legacy business either.
Ord Minnett points out the earnings beat in the Life Sciences division was supported by both revenue growth and margin expansion, although a slowing in the rate of revenue growth to 4.5% from 9.3% a year ago in its legacy business caused some concern.
Ord Minnett expects the 4.3% rate to hold in the second half of FY26 before picking up in FY27 and later years.
Conservative Guidance
At the group level, ALS’ FY26 organic revenue guidance has been upgraded to 6-8% growth from 5-7% with steady margin improvement reiterated. The seasonality is expected to be 48:52 between the first and second halves.
Profit guidance is slightly trimmed incorporating the impact from costs pushed above the line (restructuring and greenfields), for which a decision was taken to drive improved accountability given these costs are often recurring for TIC businesses.
ALS is now anticipating Commodities organic revenue growth of 12-14% in FY26 (up from 5-7%). To Morgans, this feels conservative given Commodities delivered 12% growth in the first half, pricing is turning favourable in the second half and, in Morgan’s view, volumes are set to accelerate.
In everyone’s view actually.
Citi believes ALS’ upgraded Commodities organic revenue growth guidance purely factors in the observed run-rate in the first six-seven weeks of the second half. In other words, a meaningful return of juniors or any progressive uptick in exploration levels are not fully factored in.
Citi also thinks risk to the margin for Commodities is likely to the upside, underpinned by higher sample volumes and continued high-performance metal take-up.
There are healthy signs for the Commodities business heading into second half, Jarden agrees. Geochemistry sampling flows have lifted by “early double digits” in the first half FY26, an “impressive” acceleration from the 5% achieved in the second half FY25.
More importantly, in Jarden’s view, this coincided with price/mix lifting from a negative -4% in the prior half to positive 2% in this half. Jarden anticipates “double digit” sampling flow growth to continue in the second half and for price/mix benefits to be retained.
The broker notes this outlook is not presently captured in guided half-on-half improvement in underlying Commodities earnings margins of 100 to 125bps. Accordingly, Jarden’s forecasts sit at greater than double this guidance (320bps) boosted by price/mix leverage.
There is also a degree of conservatism in FY26 Life Sciences margin guidance, Citi suggests, implying a sequential deterioration in margin, despite full-year organic revenue growth being expected to remain flat or 1-2ppt higher versus the first half.
Views All Positive (Almost)
Citi expects momentum to continue to accelerate particularly with respect to Commodities. On this basis, Citi maintains a Buy rating.
The stock has had a strong run, Macquarie notes, and the PE multiple is not cheap, but the shares should be supported by ALS’ strong earnings per share growth profile which is above both the market and global TIC peers.
2026 exploration budgets should trend positively and there’s potential for the juniors to co-join the senior driven exploration recovery.
Macquarie retains Outperform.
Bell Potter retains Buy, expecting Commodities to deliver strong earnings growth and margin expansion over the next 12 months as exploration market activity strengthens, and with profitability also improving at Life Sciences, Bell Potter estimates ALS could deliver an attractive 17.5% compound annual earnings growth rate over FY26-27.
Accelerated M&A also represents upside, although Macquarie highlights the potential for bolt-on acquisitions across Commodities and Life Sciences but nothing transformational.
ALS is the dominant global leader in geochemistry testing (circa 50% market share), Morgans notes, which is highly cash generative and has little competition for a variety of reasons. The excess capital from Commodities is used to fund capital-driven earnings growth in Life Sciences.
Morgans retains Buy.
UBS also maintains a Buy rating with the stock trading at a one-year forward enterprise value to earnings multiple of 14x, in line with where the stock has traded at during previous exploration upcycles, albeit the current gold price is some 2.5x higher.
UBS’ Buy thesis is underpinned by the view that the record gold price should drive a recovery in exploration activity.
Ord Minnett has an Accumulate rating.
That leaves a full suite of Buy or equivalent ratings among the six brokers monitored daily by FNArena covering ALS (although Ord Minnett’s “Accumulate” is actually one rung below “Buy” in this broker’s five-tier system).
The consensus target among the six has risen to $24.26 post the FY25 result from $22.29.
Jarden has made a substantial increase to its target, but only to $18.40 (from $14.85). While in full agreement with other brokers with regard upside for the Commodities division, Jarden is not as confident as others with regard Life Sciences.
ALS is a well-managed business, Jarden acknowledges, with a competitive edge in key markets. However the stock’s PE expansion to date has created a need for earnings delivery to be ahead of the market, which keeps this broker cautious.
Jarden retains an Underweight rating.
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