When share prices outrun fundamentals

ANZ Group’s sharp rally, steady optimism around Origin Energy and a brutal selldown in Pro Medicus highlight just how disconnected share prices can be from fundamentals in this market.

ANZ Group (ASX: ANZ) – Fabulous share price rise yesterday. Pre-provision profit beat by ~4%. Costs were the big story. They fell 8% QoQ, which was already running ahead of FY26 guidance. Margins were flat underneath and volume growth was weak – mortgages and business lending only ~0.5–1% QoQ. Still losing market share.

Management are executing on cost-out and the 2030 plan looks on track operationally, but an 8.5% share price jump feels generous without clearer evidence of mortgage or business banking growth. For now, it is trust in management on execution rather than a tangible revenue inflection. Think of it as a short-term sugar hit. Brokers agree. “Share price gotten ahead of fundamentals” is the common phrase. Target prices have nonetheless been bumped up (begrudgingly again) by 6% on average. The average target now implies 11% downside. For the long-term income investor, there is nothing to do but enjoy the ride.

Origin steady but upside limited

Origin Energy (ASX: ORG) – Brokers were happy with yesterday’s result, as expected. Energy Markets and APLNG (the export business) were strong, allowing guidance to be raised and offsetting weaker Octopus and natural gas (the commodity) performance. Guidance is seen as conservative. $100–$150m in cost reductions are expected in FY27, which will help offset softer electricity tariffs.

ORG (and AGL to a greater extent) benefit from electricity price volatility, of which the rapid adoption of battery storage is dampening. On the flip side, battery contributions are driving growth in Energy Markets. Macquarie is positive on the Octopus long-term market share potential. Kraken valuation (the software engine behind Octopus) is one of the few blemishes. We all know software stocks are not trading on lofty premiums anymore. No change to target prices. The average implies only 2% upside.

Pro Medicus and the broker blind spot

Pro Medicus (ASX: PME) – Brokers remain favourably disposed toward Pro Medicus despite the harsh market reaction to its latest update yesterday (the stock fell 23%). Morgans says margins disappointed despite record revenue and EBIT. They see the share market response as an overreaction. Buy retained. Macquarie sees AI as a tailwind and not a competitive threat, with contract momentum ongoing. Rates as Outperform. Citi agrees but says management must remain near perfect to deliver. Rated as a buy. Morgan Stanley maintain an overweight rating and say the high multiple explains the selldown in the stock. They remain “firm buyers” on weakness. Bell Potter notes that, for the first time in several reporting periods, top-line growth slipped below 30%. Buy retained.

Brokers, true to their mandate, are refusing to say sell on the blue chip’s fall from grace. Targets on average were cut by 16%. Nowhere near enough. Hopelessly behind the eight-ball, with the average target price now implying 128% upside. The commentary is not helping the stock bounce back. It is down another 7%. Fundamentals count for nothing in this market when you are still on a PE of 77x and sentiment is in the toilet.