UBS — ASX (ASX.AX): Peak Pessimism?
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UBS maintains a Buy rating on ASX Limited (ASX.AX) with a target price of A$80, representing approximately 20% upside from current levels around A$66. The bank argues that negative sentiment has peaked, with the stock down roughly 25% from its 2025 highs and bad news largely priced in.
Current valuations offer a compelling entry point, with the price-to-earnings ratio at approximately 22x, below the five-year average of 28x and near decade lows. While fiscal 2026 EPS is projected to decline 5%, market consensus had anticipated worse outcomes. First-quarter average daily trading volumes fell 15% year-over-year but have shown sequential stabilization.
Regulatory uncertainty persists, with ASIC's review of clearing and settlement operations ongoing, though UBS believes worst-case scenarios are already factored into the share price. Long-term structural growth drivers remain intact, including digital asset initiatives and ESG product launches expected to support medium-term revenue growth. The dividend yield of approximately 4.5% for fiscal 2026 exceeds the historical average of 3.8%, enhancing the risk-reward profile. UBS recommends buying on weakness, noting limited downside risk relative to the upside potential.
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