Orica Limited: Strategic Growth and Attractive Valuation Drive ‘Buy’ Rating

Analyst Andrew Scott from Morgan Stanley maintained a Buy rating on Orica Limited (OCLDF – Research Report) and keeping the price target at A$22.50.

Andrew Scott has given his Buy rating due to a combination of factors that highlight Orica Limited’s strong position for future growth. The company’s recent investor day revealed a strategic plan that is expected to drive significant earnings growth, supported by a substantial A$400 million buyback. This buyback, alongside a new capital management framework, indicates a robust financial strategy aimed at enhancing shareholder value.
Moreover, Orica’s focus on expanding its ‘Beyond Blasting’ segment is anticipated to bolster its medium-term outlook, with management setting ambitious growth targets for Digital Solutions and Specialty Mining Chemicals. The company’s valuation metrics, such as the price-to-earnings and EV/EBITDA ratios, are considered attractive compared to historical averages, suggesting potential for re-rating. Overall, Orica’s strong start to the year and its strategic initiatives position it well to capitalize on favorable industry conditions, making it a compelling investment opportunity.

In another report released on March 10, CLSA also maintained a Buy rating on the stock with a A$21.50 price target.