Morningstar suggests investors should look beyond annual share price gains and losses. According to market strategist Lochlan Halloway, share price movements in 2025 were often influenced by momentum, liquidity, and market sentiment rather than underlying company fundamentals. Instead, Morningstar reviewed the ASX 100, focusing on changes in fair value estimates and economic moat ratings to identify shifts in analyst conviction and emerging opportunities. Morningstar is an investment research firm that provides data, analysis, and insights on a wide range of investment offerings. They are well-known for their independent research and ratings of mutual funds, stocks, and other financial products.
Fair value changes reflect revisions to expected future cash flows, discounted to present value. While most adjustments are incremental, Morningstar noted that several ASX 100 companies experienced material reassessments in 2025. These were driven by factors such as acquisitions, balance sheet improvements, and evolving competitive positions. Sigma Healthcare recorded the largest fair value upgrade, increasing by 58 per cent following its transaction with Chemist Warehouse, which transformed the group into a dominant player in the Australian pharmacy retail and distribution sector.
Other significant fair value changes included ALS, which saw a 57 per cent upgrade due to extended growth assumptions for its life sciences division, supported by structural tailwinds from outsourced testing, tighter regulations, and the energy transition. Qantas was upgraded by 56 per cent, primarily reflecting a lower cost of equity as its balance sheet strengthened and financial risks receded from pandemic levels. Conversely, GQG Partners experienced the largest downgrade, falling 31 per cent due to sustained fund outflows prompting Morningstar to cut its assets under management assumptions.
Morningstar’s analysis also identified new opportunities among ASX 100 stocks. These were companies that traded at or above fair value a year ago but are now priced below their intrinsic value, potentially setting the stage for research-driven opportunities heading into 2026. Moat rating changes, reflecting competitive advantages expected to persist for decades, were rarer, with five ASX 100 companies upgraded and no downgrades recorded in 2025.
