In major news on Australian stocks, Lendlease Group (AU:LLC) shares gained almost 10% as of writing after the company released a favourable strategy update. The update outlines plans to streamline the company’s global operations and reduce costs. Moreover, Lendlease stated its target towards debt reduction and higher returns for its shareholders through its capital allocation framework.
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The update came after the company faced severe backlash from shareholders to focus on its Australian business. Year-to-date, LLC stock has lost 13.2% of its value.
Lendlease Group is a real estate and investment company, with operations spanning Australia, Asia, Europe, and the Americas.
Lendlease’s Strategy Update
According to the strategy update, Lendlease will exit its underperforming international construction projects and concentrate on its Australian real estate operations. This move is expected to result in additional capital of AU$4.5 billion.
The company aims to generate AU$125 million in annualized pre-tax savings, driven by its lower cost base.
Regarding debt reduction, Lendlease aims to substantially decrease gearing, targeting a lowered range of 5% to 15% by the end of FY26, compared to the current range of 10% to 20%. Meanwhile, it also announced an on-market buyback of AU$500 million.
UBS analyst Tom Bodor commended the update, noting that the changes effectively tackled major investor concerns regarding the offshore segment’s profitability challenges, while also outlining plans for an organized exit.
Is Lendlease a Buy or Sell?
According to TipRanks’ consensus, LLC stock has received a Moderate Buy rating based on one Buy and two Hold recommendations. The Lendlease share price forecast is AU$8.99, which is about 39% above the current trading levels.
