The broker has cut its FY15 earnings forecasts for Codan given the company’s strategy to discount prices to clear stock and the likelihood customers will fall away on price normalisation when that occurs. The broker also identifies various headwinds, including a subdued gold price and an uncertain political environment in Africa.
Codan’s FY15 PE of 9.2x is not demanding but does factor in a recovery which the broker feels may be a while off. Target falls to 78c from 86c and Hold retained.
Sector: Technology Hardware and Equipment.
Target price is $0.78.Current Price is $0.72. Difference: $0.06 – (brackets indicate current price is over target). If CDA meets the CIMB Securities target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).