Citi, Morningstar impressed with Australia's Aurizon results but still see headwinds

Citi and Morningstar say Aurizon Holdings' AZJ.AX 1H26 results were solid, with co posting recovery in coal segment
Rail freight operator on Monday logged a 16% jump in HY NPAT and extended its buyback by A$100 million ($70.74 million); shares jumped 7%

Citi, however, is less optimistic looking forward, sees reversal in second-half coal profitability with expected lower yields and flat FY26 unit costs

Morningstar still sees headwinds in coal haulage, given weak operating conditions and "significant recontracting to come"

Still, given results, Citi makes modest EBIT revisions for FY26-28 and hikes dividend payout to 90%; Morningstar raises FY26 earnings forecasts but leaves longer-term outlook unchanged

Citi "neutral" on shares but hikes price target to A$4.00/share, Morningstar maintains A$4.40 per share target, says it remains undervalued
Citi says co's intention to not divest its Network segment was widely anticipated

YTD, shares up 5.2%

($1 = 1.4136 Australian dollars)