Credit Suisse is firmly of the view that the de-rating of the company over the past six months is overdone. Earnings are growing, operating conditions are stable and the momentum is positive.
The broker acknowledges that, like many small cap diversified financials, the risks associated with the business can limit the upper PE multiple the stock can achieve. At a 12.5x 12-month forward PE the stock is considered cheap.
Outperform rating retained. Target is reduced to $4.10 from $4.50.
Sector: Diversified Financials.
Target price is $4.10.Current Price is $3.52. Difference: $0.58 – (brackets indicate current price is over target). If ECX meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).