In Brief: Acrow, Eagers Automotive & Catapult

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This story features ACTINOGEN MEDICAL LIMITED, and other companies.
For more info SHARE ANALYSIS: ACW

The challenges being confronted by investors from higher inflation and energy costs as well as AI-disruption are creating both unlikely opportunities and possible threats.

• A record pipeline of contracts for Acrow
• Eagers finds upside to an energy crisis as EV sales soar 
• AI an ever present challenge and opportunity for Catapult

By Danielle Ecuyer

This week’s quote comes from John Authers, Bloomberg

“Wednesday’s rally is a straightforward reaction to the big reduction in “left-tail risk,” meaning the worst possible outcomes are much less likely.

“But the rates market shows a belief that costs have increased, and will likely rise further as a result of the extremely murky compromise that has brought the ceasefire.

“That points to lower profit margins ahead.”

Acrow’s outlook just picked up 

Analysts have been stressing the importance of the upcoming earnings reports and quarterly updates for any indications of changes in the outlook, post the start of war in the Middle East.

Investors took heart from the recent market update and confirmation of FY26 revenue and earnings (EBITDA) guidance from management at Acrow ((ACW)), who noted an improving trend in construction activity across Australia.

The sales pipeline stands at a record $256m; sufficient for management to give a heads up to initial FY27 guidance with revenue of $335m-$350m and earnings (EBITDA) of $88m-$98m.

This compares to FY26 revenue guidance of $315m-$325m and earnings (EBITDA) of $80m-$84m or, in Shaw and Partners’ words, “implying solid growth year on year”.

Over March, the contractor secured hire contracts worth $14.3m, which is the highest monthly value of contract wins in the company’s history, well above the previous record of over $2.5m.

The wins boosted the pipeline as noted, representing a gain of 34% on the prior year.

The improvement in trading conditions has been particularly noteworthy in the Queensland formwork business. Shaw points to the highest level in over a year, placing Acrow in a solid position for momentum being retained into FY27.

A slight downgrade has been applied to the FY27 revenue forecasts of -2.8% to align with guidance, but earnings (EBITDA) estimates remain unchanged.

Target price $1.25. Buy.

EVs rev up Eagers’ sales momentum

As investors sift through the multiple macro scenarios against a backdrop of rising inflation, an energy crisis, higher interest rates and ongoing uncertainty, brokers are adjusting to another heightened period of volatility with some counterintuitive ideas, or are they?

Jarden and Canaccord Genuity were both on the front foot when it came to updating their take on Eagers Automotive ((APE)).

March new vehicle sales data showed a decline of -2.6% y/y, but are still up 15.5% on a sequential basis, albeit, as highlighted by Canaccord, it is the fifth negative month over the year past.

This reinforces a view as described by Jarden as “the current macro looks tough for auto dealers”.

Rising interest rates, falling consumer confidence, as highlighted by the ANZ-Roy Morgan Australian Consumer Confidence survey, which lifted from its record low last week but, at 62.3pts, is at its second-lowest level since records began in 1973, on top of higher fuel prices are hardly conducive to higher value discretionary purchases.

However, as noted by both analysts, consumers are showing robust demand for fuel efficient vehicles, think hybrids and EVs, and demand surged in March, with Eagers’ two largest OEMs (original equipment makers) estimated to have represented 50%-plus of new car sales revenue.

Canaccord believes Eagers retains an 80%-plus market share for BYD sales, while Toyota, which is generating softer volumes due to supply constraint issues, is expected to generate stronger volume momentum from 2Q2026 onwards due to the robust order book.

Jarden expects volumes in EV and Plug-in EV (PHEV) brands to “surge” in the coming months and notes the key to sales is the doubling of these vehicle brand volumes from Jan-Feb to be continued for the balance of the half year.

Canaccord points to industry feedback that BYD sales are expected to be very strong over the next three months, with demand assessed as “substitution to battery EVs” rather than overall industry growth.

The rise in EV and PHEV brand sales has the scope to offset the profit decline elsewhere in the portfolio.

Regarding earnings, Eagers continues to retain a 2H skew, which is anticipated to be higher this fiscal year (2026), with also the CanadaOne acquisition and the delay in completion timing to the current quarter, meaning a full contribution for 2H2026 and three months in the first half.

BYD’s luxury brand Denza added around 300 units per month in the last two months and Canaccord anticipates this number will advance over 2H2026.

Jarden upgrades Eagers to an Overweight from Neutral, while trimming its target to $25.25 from $26.10 on EPS cuts of -6% and -7% for 2026 and 2027 predominantly due to the CanadaOne adjustment.

Canaccord retains a Buy rating and $32 target price.

FNArena’s daily monitored brokers have a consensus target of $30.433 with five Buy-equivalent ratings and one Hold.

Catapult’s ambition knows no boundaries, AI included

Morgan Stanley took a deep dive into the impact of AI disruption on Australian software and internet stocks, including Catapult Sports ((CAT)), which offered updates at its recent Analyst Day.

Management re-iterated long term targets of growing annual contract revenue (ACV) to US$1bn versus FY26 guidance of US$133m-US$134m, representing 27%-28% growth on the prior year.

As highlighted by Canaccord Genuity, ACV is targeted to grow at a compound average growth rate of 14%-22% over the next two to three years.

Strategically, the company is aiming to increase its pro team count via new logos (clients), with 5,000 teams targeted and a rise of up to 7,000-10,000 teams in five to six years, an implied compound average growth rate of 13%-18% versus 8% in 1H26.

Noting several sports opportunities, management sees soccer as greenfield with lower divisions not using any technology and basketball more exposed at the collegiate level, with expansion to other US college sports such as athletics and ice hockey.

Management is aiming to lift the ACV per team expansion (price) to US$100k-US$150k per team from US$28k currently. Since FY22, the metric has grown at an 8% compound rate.

Regarding AI, Catapult pointed to three aspects which support the company’s moat, including core data infrastructure such as wearables and cameras, which is an imperative for the AI model input feed, as well as a lack of in-house expertise for pro teams beyond the top level, which lifts Catapult’s pro team total addressable market and potential to scale the product.

The third pillar was highlighted as cross team data sets across seasons and sports, or some 5,000TB of data spanning over 15 years, which is challenging to recreate.

Management is also developing its own agentic AI solution, which takes us to the latest sector update from Morgan Stanley on TMT stocks.

The analysis indicated, in general, consensus earnings had yet to reflect the potential impact of AI models on earnings and valuations for stocks in the software and internet sectors.

Industry meetings and channel checks have prompted a downgrade in earnings forecasts and valuations, with the broker’s average revised valuation/price target now around -20% below consensus targets.

Catapult’s target has been lowered to $5 from $6.50, with Overweight rating (equivalent of Buy) retained.

EPS estimates have been downgraded by -34.4%, -51.7% and -75.2% for FY26-FY28, respectively, placing the updated forecasts between -34.7% and -109.5% below consensus estimates.

Terminal earnings (EBITDA) margin forecasts were lowered to 35% from 46%.

In contrast, the latest update from Canaccord post Investor Day included a target of $8 alongside a Buy rating.

For Morgan Stanley, management of technology companies, like Catapult, need to understand the “imperative to act decisively and with urgency” regarding the threats of AI disruption.

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