RCR – Macquarie rates the stock as Outperform

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Target $3.53 (was $2.94). The broker thinks the company is on track to deliver close to 20% earnings growth in FY13 on the back of a solid performance on the Fortescue project. The problem is, if there is one, is that the company needs to come up with $250m in revenue in FY14 to replace Fortescue.

With a new CEO is on board, the Norfolk deal turning out to be very accretive and the balance sheet still solid, Macquarie sees the goals being met. The Outperform call is maintained, the broker of the view the company is just starting to realise its margin potential.

Sector: Capital Goods.

Target price is $3.53.Current Price is $2.42. Difference: $1.11 – (brackets indicate current price is over target). If RCR meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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