Orica (ASX:ORI) is poised for favorable macro demand and supply conditions over the medium-term, Jefferies said Thursday in a note, after the company reported its half-yearly underlying earnings 3% to 5% ahead of estimates.

The investment firm raised its fiscal year 2027 and fiscal year 2028 EPS forecasts by 2% and 1%, respectively, even after factoring in a AU$20 million earnings impact from turnaround plans at its KI and Yarwun plants, offset by the non-recurrence of the Carseland plant turnaround and contributions from the Nelson Bros acquisition.

Jefferies said Orica's specialty chemicals and digital businesses are performing strongly and expects the segments to grow about 10% annually through fiscal year 2027 to fiscal year 2028. Non-blasting businesses are seen to improve returns and reach about a 12% return on investment capital by the end of fiscal year 2028.

The firm maintained a buy rating on Orica, citing that the stock remains one of its top picks, and raised the price target to AU$25.21 from AU$24.04.