Small Caps | May 18 2026
This story features IMDEX LIMITED.
For more info SHARE ANALYSIS: IMD
The company is included in ASX200, ASX300 and ALL-ORDS
The growth profile for Imdex looks backstopped by global exploration and a growing contribution from tech earnings, but is Q4 at risk of disappointment?
- Imdex's third quarter revenue update raised some questions about growth
- Rising global exploration budgets and growing demand for mining technology solutions
- Analysts highlight strong sensor and technology growth for Imdex
- Is Q4 poised to disappoint?
By Danielle Ecuyer
Third quarter update served up a slight miss
Markets are forward looking and with commodity-exposed cyclical stocks, the central question for some analysts is, ‘can such a company outperform through the cycle?’
Imdex ((IMD)) is placed in the sweet spot of rising global exploration spending, as vindicated by its 3Q26 trading update not that long ago.
Breaking down the quarter contributions, Morgans views the numbers as somewhat “muddled” by recent acquisitions Datarock and Krux, which were fully consolidated into the accounts over the quarter.
(For more details see https://fnarena.com/index.php/2025/12/11/imdex-builds-rock-knowledge-acquisitively/)
Forex has had an implied impact over the quarter, with group revenue up 23% y/y and organic revenue rising 19% y/y. As highlighted by the Morgans analyst, but for forex, the group’s top line results would have aligned more closely with top-of-the-market forecasts.
In constant currency terms, group revenue rose 29% annually and organic revenue was up 26%. Sensors performed strongly, as volumes advanced by 33% y/y compared to revenue growth over the period of 27% year-on-year.
Fluids growth erred on the soft side; sales rose 7%, with the analyst attributing some of the weakness to allocation to integrated services.
Bell Potter observes the quarterly revenue was broadly in line with forecasts. Highlighting the segmental breakdown across divisions, 70% of group revenue was generated by sensors, services and software revenue, a rise from 68% in 1H26.
The rise in tools on hire, up 33%, would also account for some of the growth.
Sensor revenue rose 27%, field services lifted 27%, Imdex mining technologies up 26%, digital up 114%, and sale of goods 7%.
Americas and APAC were the best performers, leading revenue growth by 27% and 28%, respectively.
Notably, demand was robust across sensors and field services. Management pointed to negligible Middle East impacts.
Drilling down to more details offers some answers
Canaccord Genuity’s breakdown of the update explains organic revenue, up 19% ($119m), was spot on the mark for expectations. The result also implies around $4m in revenue from the recent acquisitions versus a $6.7m estimate, which is attributed to the deferred settlement of the additions.
The difference of circa -$1.9m less revenue is considered inconsequential from this broker’s perspective.
There was no mention of earnings or margins in the trading update, but the outperformance of tools and tech relative to fluids is highlighted as positive for margin accretion.
Morgans has a similar take, explaining the Devico acquisition (sensors) had a circa 45% earnings (EBITDA) margin at the time of acquisition.
In contrast, fluids usually generate mid-teen margins.
A word or two of caution
Jarden is more circumspect, pointing to a “moderation” in revenue growth from 12.5% in 1H26 relative to 2H25, to flat in 3Q26 relative to 2Q26.
While not breaking down the revenue divisionally like the other analysts, Jarden believes the relative slowdown has occurred at a time when a ramp up in exploration activity is happening post equity raisings.
Customer exploration budgets are expected to rise by 15% to 20% growth in 2026, supported by higher gold prices.
Imdex detailed junior exploration remains active in WA and Western Canada, while also referring to global exploration budgets, largely from the major operators.
Management also highlighted growth in primary commodities of gold and copper in Australia and South America.
For Canaccord, this is a “traffic lights have turned green” moment.
As for Bell Potter, this analyst details R6M junior raising advanced 74% y/y in April, a slowdown since the peak in October 2025.
R6M refers to the rolling six months equity raisings by junior mining and exploration companies.
Observing the period between capital raisings and the deployment of funds has extended over the usual 6-9 months, Bell Potter remains upbeat on the recovery in junior exploration over 2026.
Outlooks diverge on upside and downside risks
Against what is collectively considered a positive macro backdrop for Imdex, Jarden is cautious on the company’s ability to serve up revenue growth in 4Q26 which meets consensus expectations, based on the 3Q26 update.
Consensus forecasts imply revenue growth of 26% y/y, equating to 22% growth on the third quarter from a flat result just announced.
The crux of the issue for Jarden is the stock, at current levels, appears fully valued around 31x price-to-earnings for one year forward earnings. In combination with what is read as a slower growth quarter, indications for the fourth quarter signal the possibility of a revenue miss against market expectations.
The valuation is also seen as extended relative to its historical average at a time when consensus might have to make negative updates to EPS forecasts.
Accordingly, Jarden downgraded the stock to Sell from Underweight, while acknowledging the positive industry tailwinds. The business was also highlighted as well managed but “leveraged to high expectations”. Target set at an unchanged $3.60.
Canaccord is less concerned by the apparently weaker drill hole activity and slowdown over March and April, which is not considered surprising given the geopolitical uncertainty.
Equally, the rolling three-month quarter-on-quarter drill hole activity, globally, comes off a very strong finish to 2025. This analyst takes the view the apparent slowdown is but a temporary blip on the outlook, which is showing an ongoing structural recovery.
Strategically, Canaccord singles out management’s ongoing growth strategy, which is tilted at M&A activity.
For the glass-half-full approach, the Canaccord analyst sums up the Imdex proposition as the company can accelerate earnings growth via growing global exploration budgets, there is a rising proportion of tech revenue, and then there’s the build out of its product suite/cross sell.
This broker forecasts a three-year compound average growth rate of 22%, with a Buy rating and $4.88 target.
Daily monitored Morgans is more upbeat on the outlook for 4Q26, highlighting 21% growth for 4Q25 against 3Q25. Incremental margins should also lift above the usual 40%-50% due to the growth in sensors against fluids. Incremental margins of 55%-plus are forecast for 2H25 compared to around 40% in 1H26.
Morgans also sees considerable upside to current consensus earnings for FY27 and is estimating earnings (EBITDA) of $200m, 7% above consensus.
The risk is skewed to the upside, this broker argues, with scope for breakeven acquisitions of Datarock, Krux and ESA to make positive earnings contributions.
This would imply a lower organic growth rate for the base Imdex and Devico businesses.
The stock is Buy rated with a $5 target.
Despite slightly higher interest costs due to floating rate debt, and some slight EPS forecast downgrades, Bell Potter remains equally very upbeat.
Its target price is raised to $5.10 from $4.60 due to a higher assumed terminal growth rate of 4%, up from 3.8%, alongside a more “optimistic” earnings outlook.
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