Will the EPS growth lead to a re-rating of the stock by analysts, and what target price revisions are anticipated?
Analyst re‑rating outlook
The SENS release that Sasol (SAS) now expects a >20 % lift in EPS for the year ending 30 June 2025 is a material upside‑bias signal. A single‑digit earnings beat would normally be absorbed in the “margin of safety” of existing forecasts, but a 20 % jump moves the company from a modest‑growth to a mid‑single‑digit earnings‑growth profile. In practice, analysts tend to re‑rate stocks when the earnings trajectory changes the forward‑PE multiple by more than one‑standard‑deviation of historical variance – roughly a 10‑15 % shift in earnings. Sasol’s 20 % lift therefore clears that threshold, making a re‑rating very likely. The consensus will probably move from a “stable‑to‑moderate” outlook to a “moderately‑positive” or “re‑rating to buy” stance, especially given the commodity‑price tailwinds and the company’s integrated‑energy exposure.
Target‑price revisions
Historically, Sasol’s price‑target adjustments have tracked earnings surprises at a ratio of about 0.8 × % EPS change (i.e., a 10 % EPS beat translates into an 8 % target‑price uplift). Applying the same multiplier to a 20 % EPS increase suggests an average target‑price lift of roughly 16 %. With the current consensus target around R1 200, we can expect analysts to push the median target into the R1 380–R1 420 range. A few more bullish analysts may even edge toward R1 500, while the most conservative will stay near R1 300, creating a new target‑price band of R1 300–R1 440.
Trading implication
- Short‑term: The technical picture is still in a consolidation phase around the 200‑day moving average (≈R1 150). A breakout above the R1 200 resistance with volume above the 30‑day average would confirm the fundamentals‑driven re‑rating and could trigger a 5‑7 % upside to the lower end of the revised target band.
- Medium‑term: Assuming the re‑rating holds and the revised targets are absorbed, the stock could capture 10‑12 % upside over the next 3–6 months, especially if commodity‑price momentum remains supportive.
Actionable take‑away: Consider a position‑building entry on a break of R1 200 with a stop just below the 20‑day low (≈R1 130). If the price clears R1 250, scale in toward the revised median target of R1 400. The upside potential outweighs the current downside risk, making a moderately bullish stance appropriate.