Shares of small-cap energy company Matrix Composites & Engineering Ltd (ASX: MCE) experienced a notable increase of 9.5% on Thursday, driven by an optimistic outlook shared during its annual general meeting (AGM). The company specializes in subsea umbilicals, risers, and flowlines (SURF), providing essential buoyancy and corrosion protection solutions for offshore oil and gas operations.
The rise in Matrix’s share price can be attributed to the announcement of $70 million in secured revenue for the financial year 2026 (FY26), which includes year-to-date sales. This figure comprises $65 million in contracted subsea work. Additionally, the company highlighted a robust quotation pipeline in both drilling and SURF markets, with ongoing negotiations expected to bolster FY26’s order book.
Positive EBITDA Forecast for FY26
Bell Potter, a reputable financial services firm, provided an updated price target for Matrix, indicating significant upside potential. The brokerage noted that revenue, earnings before interest, taxes, depreciation, and amortization (EBITDA), and overall profitability would be more concentrated in the second half of FY26. The firm expects EBITDA to turn positive for the fiscal year, an important milestone for a company often characterized by cash burn.
For small-cap stocks, the guidance indicating a positive EBITDA is a critical development. This projection signals a pivotal shift in Matrix Composites‘ financial health and risk profile, moving from a phase of “cash-burn” to a “self-funding” model. Many small-cap companies, particularly in sectors such as technology, biotechnology, and clean energy, typically operate with negative EBITDA, indicating unprofitable core operations. A transition to sustained positive EBITDA in FY26 is significant, especially as long-term projections from Bell Potter suggest a trend toward durable profitability.
Market Reactions and Analyst Recommendations
While the guidance of a positive EBITDA is encouraging, Bell Potter remains cautious regarding Matrix’s prospects. In a report, the brokerage maintained its hold recommendation but reduced its target price to $0.26, down from $0.28. The firm cited phasing issues in major projects that negatively impacted revenue, EBITDA, and profitability in the first half of FY26, leading to a downgrade of its EBITDA estimate from $1.8 million to a negative $0.6 million.
On a more positive note, Bell Potter indicated that the anticipated skew toward stronger EBITDA and profitability in the second half of FY26 should contribute to a projected positive EBITDA for the entire fiscal year, estimated at $6.2 million, representing a 25% increase year-on-year. Furthermore, Matrix has flagged additional pipeline opportunities that could support project deliveries in FY26, potentially enhancing future forecasts.
As of the last close, Matrix Composites shares finished at $0.23, following the recent surge. Based on the updated price target of $0.26, the stock presents an estimated upside of approximately 13%.
Investors considering Matrix Composites should weigh the implications of its evolving financial outlook carefully. While the positive EBITDA guidance is a strong indicator of improving financial stability, the cautious stance from Bell Potter suggests a need for vigilance as the company navigates its operational challenges.
