As we approach the halfway mark of the February 2025 reporting season, with ~40% of the ASX 200 having now reported (on a market capitalisation basis), it is clear that delivery against forward consensus expectations has been the key to stock outperformance.
While it is still relatively early days, so far reporting season has featured a broadly even split of consensus upgrades and downgrades to 12 month forward EPS estimates (albeit with slightly more upgrades). Our analysis estimates that 12 month forward consensus EPS revisions have averaged +0.3% for industrials stocks (ex-resources) that have reported.
However, there has been a wide dispersion of share price reactions to results, reflecting broadly full valuations across the market, which has left little ‘room for error’ this reporting season.
Companies that have experienced forward EPS downgrades after their results announcements have generally seen outsized share price declines, with average 1 day returns of -5.9% and average post result returns of -7.2% to date. Meanwhile, companies with EPS upgrades after reporting have experienced average 1 day returns of +3.3% and average post result gains of +3.8% to date.
The focus of this report is on key results from across the Healthcare (CSL, ResMed), Banking (Commonwealth Bank, Westpac), Online Classifieds (CAR Group), and Insurance (IAG, Suncorp) sectors.
Healthcare – Mixed Start to Reporting Season
February has been a challenging month for the ASX 200 healthcare sector, driven by disappointing interim results from Cochlear and CSL, as well as Fisher & Paykel’s guidance that its costs will increase under the new US tariff regime.
Key results from the Focus Portfolio so far have included ResMed and CSL, while Telix Pharmaceuticals is due to report on 20 February.
ResMed – Another Beat
ResMed (RMD) is held in the Focus Portfolio at a weight of 3.5%.
ResMed posted yet another strong result in Q2, with continued double-digit revenue growth (10%) and significant margin expansion (gross margin +300bps to 58.6%) together driving EPS growth of +23%, which was +5% ahead of consensus.
Management also highlighted that the outlook for CPAP demand will be supported by ‘once in a generation’ tailwinds from:
- New generation wearables from companies like Apple and Samsung can now flag potential sleep apnea specifically. This should drive greater awareness over the medium-term, supporting CPAP demand.
- GLP-1 therapies are also expected to be a tailwind for CPAP demand over the medium-term. In its result, ResMed provided real-world data which shows a positive correlation between GLP-1 usage and CPAP uptake. The logic is that individuals who are prescribed GLP-1 drugs to treat obesity are also likely to be referred by their doctor for CPAP therapy as part of their holistic treatment plan, thus bringing new patients into the sales funnel.
From a valuation perspective, while we acknowledge that ResMed’s PE multiple has re-rated from its post ‘GLP-1 panic’ lows, the company still offers attractive value relative to other opportunities on the ASX (and in healthcare specifically). ResMed trades on a forward PE multiple of ~24x (vs its 5-year average of ~32x), which is attractive in the context of ~23% consensus EPS growth in FY25 and a double-digit EPS CAGR over FY26/7.
CSL – Beats by Behring & Vifor offset by Seqirus miss
CSL (CSL) is held in the Focus Portfolio at a weight of 8%.
Group NPATA grew by +5% in 1H25, which was 4% below expectations, with consensus beats from Behring and Vifor offset by a significant miss from Seqirus. Despite the soft interim print, management reaffirmed its FY25 guidance for NPATA growth of 10-13% (constant currency).
Seqirus saw its revenue decline by -9% (constant currency) during the half, driven by low immunisation rates which have significantly impacted the US flu vaccine market. However, we don’t expect ‘vaccine fatigue’ to persist over the long-term. Immunisation rates should recover to trend growth of +4% over the medium-term, noting the US is experiencing its worst flu season in 15+ years, which should support a recovery in immunisation rates in FY26.
More positively, the key Behring segment showed strong momentum, with gross margins expanding +170bps in constant currency terms to 51.7% (+21bps above consensus). Management also retained its margin target of 57% by FY27/28. The path to margin recovery is supported by lower collection costs, on the back of the Rika donation system rollout.
Notwithstanding the disappointment from Seqirus, our investment thesis remains intact. Behring’s gross margin expansion remains on track, which is by far the most important driver of CSL’s earnings growth over the medium-term. At a forward PE of ~23x, CSL is attractively valued considering a 3-year consensus EPS CAGR of 12%.
Banks – Key Views Unchanged
Commonwealth Bank – Modest Beat Doesn’t Justify Extreme Valuation
The Commonwealth Bank (CBA) is not held in the Focus Portfolio.
CBA posted a sound, but not spectacular, 1H25 result, with +2% cash NPAT growth driving a slight consensus beat.
The key positive was lower-than-expected credit impairment (i.e. bad debt) expenses. CBA’s credit quality continues to be surprisingly resilient, while arrears were broadly stable during the half. Lower bad debt expectations helped underpin +1.5%/1% upgrades to consensus EPS growth for FY25/26.
Minor upgrades are not enough to justify CBA’s extreme valuation, which is around all-time highs on a PE basis and remains at a significant premium to peers. This is despite CBA offering only low to mid-single digit EPS growth over the next three years.
Accordingly, we are comfortable retaining zero exposure to CBA in the Focus Portfolio, with the company remaining fundamentally overvalued in our view. However, positive consensus earnings momentum (i.e. consensus upgrades) appears to be the pre-eminent driver of the stock at present.
Westpac – Sound Underlying Result
Westpac (WBC) is held in the Focus Portfolio at a weight of 5.5%.
WBC’s 1Q25 update was broadly in line with expectations, with 1H25 consensus cash earnings of $3.5bn remaining very achievable providing the bank can replicate its performance from 2Q24 (which we are confident it can).
The key negative in the result was WBC’s headline NIM (net interest margin), which fell -15bps (vs 2H24 average) driven by one-off hedging impacts. More importantly, however, WBC’s core NIM (which excludes these impacts) fell just -2bps compared to 2H24.
WBC’s underlying performance was a key positive, with the bank demonstrating positive operating jaws as it posted revenue growth of +2%, which outpaced cost growth of +1%.
Overall, our view towards WBC remains unchanged. WBC remains one of our preferred bank exposures (alongside ANZ) given its attractive valuation relative to CBA and NAB and its solid capital returns profile.
Moreover, we note WBC’s asset quality remains strong, its home loan book is growing above system and its ROE has been improving - with its UNITE (technology consolidation) program expected to drive it higher over the medium-term.
Key Result – CAR Group: Solid Growth Despite Tough Cyclical Backdrop
CAR Group (CAR) is held in the Focus Portfolio at a weight of 3%.
CAR grew its EBITDA by 12% in 1H25 (constant currency), which was a 2% miss to consensus estimates, with management flagging challenging macro conditions particularly in the US market. FY25 guidance remained broadly unchanged, outside of its slight qualitative downgrade to North American revenue growth from ‘good’ to ‘solid’ reflecting a delay in planned price increases.
The North American RV market has remained subdued for longer than anticipated. However, Trader Interactive continues to gain share (driving listings) and lift its depth penetration (driving yield), which helped underpin relatively impressive NPAT growth of +9% (constant currency) despite the cyclical downturn. The very fact that CAR has delivered this level of growth in a softer macro environment demonstrates its quality/structural growth attributes, giving us confidence in its ability to grow its earnings at a mid-teens rate as the macro improves.
While we were looking for early evidence of improvements in US RV activity which was not evident in CAR’s result, we continue to expect improvements in the RV market over the medium-term as consumer confidence improves following several interest rate cuts and a more stable political landscape (post-election).
Notwithstanding some macro weakness, we remain confident in CAR’s competitive positioning, its pricing power, its margin expansion potential, and its long runway for growth offshore. Together, these factors underpin our expectations of mid-teens EPS growth over the medium to long-term. Considering all of this, CAR’s valuation is attractive at a forward PE of ~36x (compared to ASX comp REA Group at ~54x), which presents a compelling buying opportunity.
General Insurers – Peak Premiums, Peak Earnings
The Focus Portfolio has no exposure to the general insurance sector.
Insurance Australia Group (IAG) was removed from the portfolio in September 2024 following its FY24 result. Our rationale was that ‘the scope for further earnings upgrades has become more limited following the recent peak in premium price inflation’ and that ‘margins have likely peaked’.
In line with our view, Suncorp (SUN) signalled that premium growth will moderate from here in its result, while IAG lowered its FY25 gross written premium (GWP) growth guidance to the bottom of its ‘mid-to-high single digit’ range, which has driven consensus EPS downgrades of ~3.5% for IAG over FY26-28.
Both IAG and Suncorp (SUN) are shifting their focus away from pricing and towards volumes to drive GWP growth, which we expect to result in heightened competitive intensity over the medium-term. With premium price tailwinds moderating, competition rising, and insurance margins at cycle highs, further margin expansion is unlikely from here.
Accordingly, both IAG and SUN’s earnings are expected to peak in FY25, which keeps us comfortable retaining our underweight exposure to the general insurance sector.
| Company | Ticker | Focus Portfolio weight % | Period | Result summary |
| Breville | BRG | 3% | 1H25 | Beat (soft guidance). BRG posted a strong 1H25 result, slightly beating consensus expectations from the top to bottom line, but this was overshadowed by conservative FY25 guidance. FY25 EBIT growth guidance of +5-10% (consensus +10%) appears to be deliberately cautious to account for the uncertain trade (tariffs) environment. However, we note that management have a history of issuing conservative guidance and beating it (see 1H24). BRG stated that FY25 figures will be largely unaffected by tariffs due to its inventory pull forward, while only 10% of purchases will be exposed to the US tariffs on China by the start of 2H26. Overall, this was a strong result reflecting positive momentum in every key geography and we remain constructive towards BRG’s ability to navigate trade risks like it did in Trump’s first term. |
| Evolution Mining | EVN | 3% | 1H25 | Beat. After pre-releasing its December quarter operational update last month, EVN posted a strong beat in its 1H25 result, albeit this comes as little surprise as we have previously flagged that consensus gold prices were stale and needed to be upgraded. Pleasingly, EVN once again reiterated FY25 production / costs guidance, which keeps us positive towards the business as it continues its run of strong operational delivery (alongside our positive outlook for the gold price). With its continued operational execution, building free cash flow profile (easing capex and growing production) and our positive outlook for gold (safe haven status amidst economic/geopolitical uncertainty), we remain positive towards EVN. |
| HealthCo REIT | HCW | 3% | 1H25 | In line. HCW posted another in line result, although the focus of the result was management’s commentary of the Healthscope situation. FFO and DPU both grew 5%, which was in line, driven by rental escalations and development completions, while guidance (FFO and DPU of 8.4 cps) was reaffirmed. Cash rent collection across the portfolio remained at 100%. Regarding its largest tenant Healthscope, HCW have explicitly stated they will not offer further rental support. HCW has also highlighted that they have contingencies in place, including replacing Healthscope’s tenancies with other operators if it breaches its lease obligations, which it is already in discussions with. Overall, HCW remains very cheap, on a ~35% discount to NTA, and offers a dividend yield of ~8.5%, but we will continue to monitor the Healthscope situation closely. |
| HUB24 | HUB | 3% | 1H25 | Beat. Revenue of $195.2m (+26% pcp, +3% vs consensus) driven by predominantly by Platform segment. EBITDA of $66.3m (+44% pcp, +7% beat) driven by Platform revenue growth and muted headcount growth. Pleasingly, HUB also upgraded its FY26e Platform FUA target to $123-135b (+7-10% vs prior). We expect the result to drive mid-single digit earnings upgrades. |
| Macquarie | MQG | 4% | 3Q25 | Miss. Management stated that its 9 month (FYTD) NPAT is flat year-on-year (YoY), which is a notable slowdown given it was ahead YoY at its half year result. MQG will need Q4 to be a ~A$1.2bn quarter to meet FY25 consensus cash NPAT forecasts of A$3.8bn, which will be difficult to achieve, creating consensus earnings risk over the near-term. We still remain modestly overweight as MQG is trades at a reasonable valuation compared to other financials (particularly the banks) and offers strong medium-term growth outlook. MQG is well placed to benefit from a pick-up in asset realisations within MAM and improvements in capital market activity for MacCap once the cyclical backdrop improves. |
| South32 | S32 | 3% | 1H25 | In line. S32 posted a positive update, with earnings in-line and a positive surprise with a dividend per share of 3.4 cents, which was up considerably from the pcp of 0.4 cents. FY25 production guidance remained unchanged and production increased at every asset in the Dec quarter. S32 has significantly delivered its balance sheet (net debt down from US$715m to US$47m), aided by the sale of non-core asset Illawarra Met Coal. The company is looking to sell off its nickel assets, which will strengthen its product mix given the weakness in nickel. The WA EPA approval of Worlsey Alumina’s mine life extension will also be positive for production outlook long-term. Overall, we continue to have a favourable outlook of S32, particularly as its key exposures of aluminium and copper remain in tight supply environments. |
Source: Visible Alpha, Refinitiv, Wilsons Advisory.
| Company | Ticker | Date | Period | Consensus EPS for period (cps) | EPS growth (vs pcp) |
| Industrials | |||||
| Lottery Corp | TLC | Wed-19-Feb | 1H25 | 8.0 | -8.3% |
| James Hardie | JHX | Wed-19-Feb | 3Q25 | 34.5 | -15.9% |
| Goodman Group | GMG | Wed-19-Feb | 1H25 | 53.2 | 17.8% |
| Santos | STO | Wed-19-Feb | FY24 | 20.0 | 7.8% |
| Telix Pharmaceuticals | TLX | Thu-20-Feb | FY24 | 0.1 | 86.3% |
| WiseTech | WTC | Fri-21-Feb | 1H25 | 31.0 | 23.0% |
| Sandfire Resources | SFR | Fri-21-Feb | 1H25 | 0.1 | >100% |
| Other key stocks (not held) | |||||
| NAB | NAB | Wed-19-Feb | 1Q25 | 112.9 | 0.8% |
| Wesfarmers | WES | Thu-20-Feb | 1H25 | 232.0 | 2.7% |
| Transurban | TCL | Thu-20-Feb | 1H25 | 6.1 | -7.0% |
| Telstra | TLS | Thu-20-Feb | 1H25 | 9.1 | 8.5% |
Source: Refinitiv, Visible Alpha, Wilsons Advisory.
Written by
Greg Burke, Equity Strategist
Greg is an Equity Strategist in the Investment Strategy team at Wilsons Advisory. He is the lead portfolio manager of the Wilsons Advisory Australian Equity Focus Portfolio and is responsible for the ongoing management of the Global Equity Opportunities List.
About Wilsons Advisory: Wilsons Advisory is a financial advisory firm focused on delivering strategic and investment advice for people with ambition – whether they be a private investor, corporate, fund manager or global institution. Its client-first, whole of firm approach allows Wilsons Advisory to partner with clients for the long-term and provide the wide range of financial and advisory services they may require throughout their financial future. Wilsons Advisory is staff-owned and has offices across Australia.
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