RBC Capital Markets has increased its share price targets for Downer EDI and Service Stream, maintaining an “outperform” rating for both companies. This decision follows the Australian government’s defence program initiatives. Downer’s revised price target is now $7.75, up from $7.25, while Service Stream’s target has been raised to $2.50 from $2.34.
According to RBC analyst Nicholas Daish, Downer and Service Stream are positioned as the primary beneficiaries of the defence base transformation procurement program. Downer EDI is a leading provider of integrated services, while Service Stream specialises in essential infrastructure. The analyst’s commentary highlights the significance of these contract wins in bolstering the financial outlook for both entities.
While RBC also maintained an outperform rating for Ventia Services, Daish’s outlook was less enthusiastic despite a price target increase from $5.03 to $5.50. Ventia Services has secured work within the same procurement process; however, the analyst notes that the company will operate across fewer geographical areas, resulting in a slight decrease in its overall revenue contribution from defence contracts.
