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Highlights

  • ALS shares fell as much as 9.3% to AU$16 following a $350 million equity raising announcement.

  • The decline marks the stock's biggest intraday drop since September 2024.

  • Analysts from Jefferies and Morningstar downgraded ratings and trimmed price targets amid dilution concerns.

Shares of ALS Limited (ASX:ALQ) plunged as much as 9.3% in Wednesday trading, hitting a low of AU$16, the stock’s weakest level since 28 April. The sharp decline followed the company’s announcement of a AU$350 million equity raising, which it said would be used to fund developments across its four key laboratories globally.

The fall marks ALS’s biggest intraday percentage loss since 19 September 2024, placing it among the top decliners on the S&P/ASX 200 Index for the day. The laboratory testing services provider released its FY25 financial results on Tuesday, coinciding with the equity raising announcement.

The capital raising move took investors and analysts by surprise. Broker Jefferies downgraded ALS shares from "buy" to "hold", citing the unexpected dilution and questioning the necessity of raising funds externally. Jefferies also reduced its price target for the stock from AU$18.80 to AU$18.20. The brokerage noted that ALS could potentially have funded the expansion internally, thus avoiding dilution to shareholders.

Investment research firm Morningstar also revised its outlook, cutting its price target from AU$20.00 to AU$19.70. However, Morningstar acknowledged that the immediate repayment of high-interest variable debt using proceeds from the equity raising could help mitigate earnings per share (EPS) dilution in FY26.

Despite the sharp sell-off, ALS shares remain up 8.1% year-to-date.

The AU$350 million capital will reportedly support laboratory expansions aimed at enhancing ALS's operational capabilities in critical growth markets.