Investors seeking to enhance their portfolios may find valuable insights in the latest analysis from Morgans, a prominent broker in Australia. The firm has provided updated ratings and price targets for three key players on the ASX 200: Domino’s Pizza Enterprises Ltd (ASX: DMP), Orica Ltd (ASX: ORI), and Xero Ltd (ASX: XRO).
Domino’s: Positive Outlook Amid Pricing Strategy Changes
Morgans has reaffirmed its positive stance on Domino’s Pizza Enterprises, maintaining a buy rating and a price target of $25.00 per share. This decision follows the company’s recent annual general meeting (AGM) update, which Morgans interprets as a sign of strength. The broker noted that Domino’s is on track to surpass its consensus net profit after tax (NPAT) for the fiscal year 2026.
Despite a decline in Same-Store Sales (SSS), Morgans highlighted that this could be attributed to the company’s shift towards a new pricing strategy aimed at enhancing profit margins for franchisees. The broker stated, “The trading update was weak, with Same-Store Sales (SSS) growth still negative; however, we think this is somewhat irrelevant while the business transitions to its new pricing strategy.”
Domino’s share price has seen a remarkable rebound of approximately 55% from its lows, driven by speculation regarding potential corporate activities. Nevertheless, the stock continues to trade at a fiscal year 2026 forecast price-to-earnings (PE) ratio of 16x, which reflects a 30% discount compared to its competitor, Collins Foods (CKF). Given this context, Morgans considers the investment opportunity to remain attractive.
Orica: Strong Performance and Growth Prospects
Orica Ltd, a leader in commercial explosives, has also received a favorable evaluation from Morgans, which has set a buy rating with a price target of $28.00. The broker’s assessment comes after Orica reported full-year results that exceeded consensus expectations. Morgans pointed out that the company has demonstrated robust earnings and cash flow growth, improved margins, and enhanced returns.
The broker remarked, “The outlook remains positive and further growth is targeted in FY26.” Notably, Orica has revised its medium-term growth goals for Digital Solutions and Specialty Mining Chemicals, in addition to increasing its return on net assets (RONA) target for the next three years. With its strong balance sheet and market-leading position in the industry, Morgans reiterated its buy rating for Orica, reflecting confidence in its future growth trajectory.
Xero: Cautious Outlook Following Increased Investment
In contrast, Morgans has adopted a more cautious approach regarding Xero Ltd, a cloud accounting platform provider. The broker has maintained its accumulate rating but reduced its price target to $141.00. The adjustment follows indications of heightened investment expenses anticipated in the second half of the fiscal year.
Morgans expressed concern that it may take time for Xero to demonstrate the value of its recent acquisition of Melio to investors. The broker stated, “Our target price reduces ~30% to $141 on lower peer multiples and lower free cash flow per share.” This change reflects a revised outlook following Xero’s first-half results for fiscal year 2026, which were largely in line with expectations but tempered by the anticipated costs associated with the Melio integration.
As Xero navigates these challenges, Morgans remains cautiously optimistic, suggesting that it may take some time for the management team to restore investor confidence and return to a growth trajectory.
Investors interested in these companies should carefully consider Morgans’ evaluations and the potential risks and rewards associated with each stock.
