RCR – Macquarie rates the stock as Outperform

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Macquarie rates the stock as Outperform

RCR Tomlinson has used due diligence on Norfolk ((NFK)) to revise its take-over proposal, but the target’s board remains supportive so this acquisition is likely to go ahead, suggest analysts at Macquarie. They do note earnings at Norfolk have been pretty inconsistent in recent years, much like RCR’s before the current management team took the reins, and that makes projecting future benefits from this deal a little rubbery.

If everything goes according to plan, this deal should be done and dusted by 6 August 2013. No changes have been made, but Macquarie is clearly supportive of the new team at RCR, suggesting "RCR is a business that is only just beginning to realise its margin potential".

Sector: Capital Goods. 

Target price is $2.94. Current Price is $2.34. Difference: $0.60 – (brackets indicate current price is over target). If RCR meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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