Inghams Group Ltd (ING.AU) saw its shares surge 5.22% during intraday trading on Tuesday, following a positive analyst report from Morningstar that highlighted the company's undervaluation and improving fundamentals.

Morningstar retained its fair value estimate of A$3.5 for the poultry firm and described Inghams' shares as "materially undervalued." The brokerage noted that the market appears "overly concerned" about current cost and balance sheet pressures, which it views as cyclical rather than structural issues. This positive assessment comes as Inghams reported nine-month core poultry volume growth of 1.1%, a significant improvement from the 2.2% decline recorded in the previous comparable period.

The analyst report also indicated that while Inghams' volume growth remains below market growth as it reallocates volumes previously supplied to grocer Woolworths, industry fundamentals remain supportive. Morningstar expects long-term demand to grow with population increases and anticipates some growth in per-capita consumption. The brokerage projects FY26 underlying EBITDA of A$194 million, which falls within the company's guidance range of A$180 million to A$200 million but at the higher end of that spectrum.