The company has appointed a new CEO and the role will start on February 13 2017. While this addresses part of the management uncertainty, Macquarie believes it will be a while before Ari Mervis is up to speed and influencing the performance of the company.
Commodity prices are starting to become a strong tailwind, although there is lower exposure for MGC because of declines in milk intake. Macquarie considers a lower exposure could continue to create competitive challenges for milk prices if other processors are passing through improved commodity returns.
A Neutral rating and $1.15 target are retained.
Sector: Food Beverage & Tobacco.
Target price is $1.15.Current Price is $0.91. Difference: $0.24 – (brackets indicate current price is over target). If MGC meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).