Aurizon Holdings' (ASX:AZJ) new copper contract with BHP (ASX:BHP) can help stabilize earnings, but the company's bulk segment still needs improvement, said Jarden Research in a Monday note.
BHP said on Monday its Copper SA business is working with Aurizon to deliver integrated rail, road, and port logistics services through four contracts valued at about AU$1.5 billion, supporting its copper operations in South Australia over the next decade.
The research firm sees the contract as a stabilizing factor, but its full earnings benefit will take time to build and is expected to meaningfully contribute only by the later years of the contract period.
Jarden expects the contract to add about AU$20 million to AU$25 million to the company's 2025 earnings before interest, tax, depreciation, and amortization (EBITDA).
The research firm has cut its 2025 EBITDA expectations for the company to AU$1.63 billion due to ongoing challenges in the Bulk business and concerns about recovering money owed by clients.
Jarden maintained its neutral rating on Aurizon, with a price target of AU$3.15, down from AU$3.20.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.