Credit Suisse suggests the company will become a cleaner and simpler business now it has exited the loss-making US. GTN will be disposing of USTN to management for a nominal sum after being unable to reduce its expenditure to manageable levels.
Nevertheless, the broker considers it a much less interesting business now the potential upside of the US market is forgone. The broker upgrades FY18 and FY19 estimates because of the absence of USTN losses.
Target is reduced to $2.20 from $2.70 on the removal of the upside from the US. Outperform maintained given the undemanding valuation.
Target price is $2.20.Current Price is $1.78. Difference: $0.42 – (brackets indicate current price is over target). If GTN meets the Credit Suisse target it will return approximately 19% (excluding dividends, fees and charges – negative figures indicate an expected loss).