ASX 200: brokers stay bullish on beaten-down stocks

The late-August to late-September 2026 reset did not emerge in a vacuum; it sat on top of a market already conditioned to accept sharp swings in sentiment and broker positioning. ASX had long warned, on 29 October 2012, that “narrower businesses could have more volatile share prices,” and on 5 September 2025 it described a “mixed FY25 profit season” marked by “significant share-price volatility and shifting investor sentiment,” even as brokers still expected “flat to low-single-digit earnings growth overall,” making a split response to FY26 results more plausible.

What made the period notable was the coexistence of broad downgrades with continuing bullish target frameworks: The Motley Fool Australia on 20 August 2026 ran the headline “10 ASX 200 shares downgraded by analysts this week,” while a 10 September piece tied the reassessment to Macquarie’s call that “the Reserve Bank [will] lift the cash rate by 25 basis points later this month” because “Higher rates compress the multiple investors will pay for future earnings.” Yet even after Judo Capital’s shares “crashed 46% in a single session in June” and credit delinquencies dragged, the same September coverage still cited FY27 profit-before-tax guidance of $210 million to $220 million and an average broker target of $1.51, implying roughly 50% upside.

The buy calls were not a denial of weakness. They reflected a view that earnings power would recover faster than sentiment, and that 13 analysts could still see upside in Judo Capital, where TradingView data cited by The Motley Fool Australia showed 12 out of 13 analysts with a buy or strong buy rating. Morgans said it was positive that Judo Bank would deliver strong earnings growth between FY26 and FY28, supported by a loan-book NIM of 3.03% in first-half FY26, a projected 3.15% in the second half, and reaffirmed FY26 guidance of $180-$190 million after strong Q3 lending growth and robust deposit performance.

The same logic applied elsewhere when setbacks looked temporary and the medium-term model stayed intact. Judo’s SME focus, with lending starting at $250,000, gave analysts a structural demand anchor, while Morgans retained its buy rating on Objective after Defence ended a contract of more than 25 years because OCL expected no impacts to earnings in FY26 and FY26 ARR ending the period in line with FY25 on a constant currency basis. At ResMed, Morgans said shares had de-rated materially this year to ~16x forward earnings even as consensus still forecast double-digit EPS growth, and it added that current industry data and RMD's operating performance provided limited evidence of a material deterioration in underlying demand.

The clearest bullish calls clustered around shares that had already been heavily de-rated, making the valuation gap itself the core of the upside case. The Motley Fool Australia said “these three ASX shares have taken a beating over the past year,” citing WiseTech Global down 60%, Pro Medicus down 39% and NextDC down 5%; even after WiseTech had “endured a messy period,” it still carried an average target of $60.63 implying about 33% upside, while Pro Medicus, despite being down 39%, had an average target of $212.65 implying roughly 12% upside and Bell Potter retained a buy rating with a $226 target.

That pattern intensified in post-results broker commentary, where the biggest upside percentages were attached to stocks already well below prior levels rather than to market leaders near highs. The Motley Fool Australia framed “5 ASX 200 shares with 33% to 61% upside post-results” around names already down 17% to 58% to 46% over 12 months, including NextDC at $13.63, down 17%, with UBS renewing a buy and a $22.55 target for 61% implied upside; WiseTech at $41.39, down 58%, with Morgans reiterating buy and a $62.50 target for 52% upside; and Droneshield at $1.74, down 46%, with Bell Potter’s $2.40 target still implying 35% upside.

What united the names winning renewed support was not vague optimism but visible triggers brokers could point to. Bell Potter reiterated its buy on Neuren Pharmaceuticals after the company’s “1H FY26 report” and “announced a maiden fully-franked interim dividend of 15 cents per share,” tying that renewed support to a concrete earnings-season catalyst and viewing the shareholder-return step as a milestone while investors await a later clinical readout; in the same vein, Medallion Financial Group’s Stuart Bromley said Pro Medicus’s “Visage platform [is] increasingly adopted by major US hospital networks,” with FY26 revenue up 22.9%, underlying NPAT up 24.1%, and fresh contract wins and renewals reinforcing future earnings.

Saluda Medical fit the same pattern: broker support was anchored in identifiable product and clinical adoption catalysts following strong FY26 results, evidence of execution that could plausibly turn weakness into recovery. Bromley said “Results in full year 2026 were strong,” with “Revenue of $US90.2 million was up 28 per cent… and ahead of upgraded guidance,” while “US patient implants increased by 50 per cent in the fourth quarter of 2026” and its newly approved CAP24 surgical paddle lead expanded the addressable US market by about 30%; even outside outright buy calls, Generation Development’s momentum in revenue, profit, funds under management and record inflows showed the market was rewarding measurable operating catalysts rather than hope alone.