Worley is repositioning the business beyond its traditional energy, chemicals and resources base, with management at its May 2026 Investor Day setting a medium-term target of double-digit underlying EBITA growth through to FY30. Institutional sell-side research has the stock rated Buy with a 12-month price target of A$15.50, implying approximately 27% upside from the recent close of A$12.19. The thesis rests on three pillars. The addressable market is being meaningfully expanded as Worley pushes into adjacent complex infrastructure markets like data centres, large-scale power, nuclear and industrial water. The mix-shift toward construction and procurement is dilutive to group margin in isolation, but a A$125 million cost-out programme is sized to fully reverse that dilution. And the stock is trading at a discount to both its own history and its global peer set after a recent earnings forecast cut. We think the entry point is attractive for investors with a multi-year horizon.
Research published 1 June 2026. Price target and upside based on prices at time of publication.
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About Worley
Worley Limited is an Australian-headquartered global professional services company providing engineering, procurement and construction services to the energy, chemicals and resources sectors. The company employs around 50,000 people across 50 countries, with deep capability in upstream and downstream oil and gas, refining, petrochemicals, mining and minerals processing, and a rapidly growing energy transition footprint covering hydrogen, carbon capture, ammonia, biofuels and grid infrastructure. Worley is listed on the Australian Securities Exchange with a market capitalisation of approximately A$6.4 billion and reports in Australian dollars on a 30 June fiscal year. Most recent results, investor presentations and the May 2026 Investor Day deck are available on the company’s investor relations page.
Wider: The Addressable Market Step-Up Is Material
Worley’s strategic pitch at the Investor Day was to take the same engineering and project delivery capability that built its core energy, chemicals and resources franchise and apply it to adjacent end-markets. Those new markets include large-scale power, data centres, nuclear, industrial water, and ports and terminals. The pitch is grounded in a defensible observation. These segments share the same complex-delivery characteristics as the existing portfolio. Long lead times, multi-disciplinary engineering, large procurement and construction phases, and clients who value execution certainty over price. Management quoted industry analysis suggesting cumulative capex spend across 2026 to 2030 in these adjacent activities is 15 to 20 times larger than the existing core markets of integrated gas and energy transition materials.
Data centres are the standout. Institutional research forecasts global data centre electricity consumption to grow approximately 220% by 2030 against the 2023 base, with AI workloads making power the binding deployment constraint rather than chips or floor space. That demand pulls through into construction of new generation capacity, grid upgrades, water cooling infrastructure, and the hyperscale facilities themselves. United States power demand is forecast to step up to a 3.2% compound annual growth rate through 2030, the fastest pace in more than 20 years, with data centres alone accounting for roughly 2 percentage points of that growth. Nuclear investment has also re-accelerated, with global power generation investment growing at a 14% compound annual growth rate between 2020 and 2024 after nearly five years of stagnation, supported by broader policy backing and ongoing technology development. Worley’s core engineering and project management skills translate directly into these end-markets. The company is not pivoting into something it does not know how to do. It is pointing existing capability at much larger pools of capital expenditure.
Middle East reconstruction is a notable optionality on top. Management commentary has been limited, but the strikes on regional LNG trains, refineries, fuel terminals and gas-to-liquids facilities have generated repair costs estimated at US$34 to US$58 billion and likely to rise. Spend will be led by engineering and construction, then equipment and materials procurement, a mix that suits Worley’s end-to-end delivery model. The timing and scale are uncertain, but the directional flow of awards is one to watch over the next 12 to 18 months.
Deeper: The Mix-Shift Tradeoff and Why the Cost-Out Programme Matters
The second leg of the strategy is to capture more of the total project life cycle. Engineering accounts for roughly 25% of the total installed cost of an asset, while procurement and construction together account for around 75%. Worley today is heavily indexed to the engineering end, with professional services representing approximately 60% of FY25 actual revenue. Pushing further into procurement and construction expands the revenue pool the company can compete for on every project, and it deepens client relationships by making Worley an end-to-end delivery partner rather than a discrete service vendor.
The trade-off is margin. Professional services delivered an EBITA margin of approximately 11.7% in FY25, while construction and procurement delivered around 6.2%. A simple mix-shift that pushes professional services down to 41% of revenue and construction and procurement up to 59% would mechanically dilute the group EBITA margin from approximately 9.5% to approximately 8.5%. That is a meaningful headwind in isolation. The bridge that closes the gap is the cost-out programme. Management raised the target on previously announced cost reductions to A$125 million, and that quantum, layered back onto the mix-shifted base, restores the group margin to approximately 9.5%.
The investor question is execution. If Worley can deliver the cost-out as promised, the group runs a roughly flat margin profile on a meaningfully larger revenue base, which translates directly into absolute EBITA dollar growth. If the cost-out slips or the mix-shift accelerates beyond what the cost programme can absorb, group margins compress and the growth narrative becomes a revenue story rather than an earnings story. Institutional research has reduced its FY26 to FY28 EBITA estimates by 0%, 9% and 7% respectively to reflect a slower starting capex base and the removal of margin accretion previously assumed from the cost-out programme, which has now been reallocated to neutralise the mix dilution. The revised FY26 to FY30 EBITA growth forecast lands at approximately 6% compound annually, around 109 basis points ahead of broader consensus but still well below management’s double-digit ambition.
The Core Capex Backdrop Is Subdued, Not Collapsing
The bull case for the wider and deeper strategy needs to be read against the cyclical backdrop of Worley’s existing customers. Sell-side analysis of capex forecasts across approximately 55 likely Worley customers in the core energy, chemicals and resources end-markets suggests spending is set to plateau after a period of healthy growth since 2020, having expanded at approximately 8% per annum over the five years to 2025. Within that picture, the outlook for energy sector capex is relatively unchanged, market expectations for chemicals capex have deteriorated since late 2025, and expectations for resources companies have improved.
The aggregate message is that Worley does not have a near-term tailwind from accelerating customer spend. The core business is plateauing rather than contracting. That sets up two interpretations for investors. The bearish read is that organic growth is going to be muted and the wider and deeper strategy needs to deliver to justify the multiple. The constructive read is that the company is making the right strategic move at precisely the right time. Pivoting capability into structurally growing end-markets at a point in the cycle where the existing customer base has run out of organic juice is good capital allocation, even if it is uncomfortable to communicate to short-horizon investors.
Valuation: The Entry Point Looks Attractive
Worley trades on a next twelve months EV/EBIT of approximately 10.2 times. That is a 21% discount to its own five-year historical average of close to 13 times, and a 14% discount to global engineering and construction peers, against a five-year average premium to peers of approximately 4%. The stock is also trading below its 10-year average, which captures a full cycle. None of those discounts on their own are decisive, but together they signal that the market is currently pricing in cyclical caution rather than rewarding the longer-dated structural opportunity.
The institutional 12-month price target of A$15.50 is built 50% on DCF using a 9.6% WACC and a 2.5% terminal growth rate, and 50% on an EV/EBIT framework applied at 11.8 times next twelve months EBIT. That target was reduced from A$16.00 in the most recent update to reflect the earnings cuts described above, and it still leaves approximately 27% upside from the recent close. The implied multiple of 11.8 times sits well below the five-year historical average and only modestly above the current trading multiple, which is to say that the target does not require multiple expansion to a heroic level to be reached. A return to the five-year average alone would imply a higher target than the current institutional case.
The dividend yield supports the holding period. Forecast yields step from approximately 4.1% in FY26 to 4.4% in FY27 and 5.1% in FY28 on the institutional model, with the payout ratio rising from roughly 64% to 70%. That delivers a cash return profile that compares favourably with most ASX 200 industrials and provides a meaningful component of the total return while the strategic transition plays out.
Risks to the Buy Call
The institutional risk framework identifies three primary risks. Project delays in client work can push revenue recognition into later periods and create lumpy quarterly outcomes. Lower-than-expected bookings or aggregated revenue would directly compress the growth trajectory needed to validate the wider and deeper strategy. And changes in the margin profile, particularly any indication that the cost-out programme is not delivering at the promised quantum, would re-open the question of whether the mix-shift dilutes group margins on a multi-year view. We would add a fourth, which is execution capability. The shift from engineering-led to lifecycle delivery requires Worley to credibly compete for procurement and construction mandates against incumbent EPC contractors who have been operating in that space for decades. The track record on early wins in the new addressable markets will be the leading indicator that institutional research and the market are watching.
Our View
Institutional sell-side has Worley rated Buy with A$15.50 of fair value. We agree with the directional case. The company is moving its capability into structurally larger end-markets at a point in the cycle when its traditional customer base is plateauing. The mix-shift maths is the right strategic move even if it is a margin headwind that needs to be solved with cost-out discipline. And the entry multiple is attractive on both an absolute historical basis and relative to peers, with the discount large enough that a return to neutral pricing delivers a meaningful return without needing any operational outperformance.
The variant view is that the cost-out programme delivers ahead of schedule or that early wins in data centres and power create market enthusiasm for a re-rating. In either scenario the upside is materially above the institutional 27% target. The downside is that the cost-out slips and the mix-shift drives a real margin compression cycle, in which case the stock derates further and the dividend yield becomes the principal support for the share price.
If you would like to discuss Worley or how ASX-listed industrials might fit within your portfolio, request a callback or call us on 1300 889 603. The above is general advice and does not consider your individual circumstances. Past performance is not a reliable indicator of future returns.
