The company’s trading update has underscored the sensitivity to adverse seasonal conditions and commodity prices. Morgans downgrades operating earnings forecast by -4.5%. As the stock is trading materially above long-term averages a severe reaction in the share price was not unexpected.
With the possible acquisition of PG Wrightson likely to require a significant capital raising, the broker suggests the weakness in the share price may affect the attractiveness of any deal.
Hold rating maintained. Target is reduced to $7.05 from $7.70.
Sector: Food, Beverage & Tobacco.
Target price is $7.05.Current Price is $7.26. Difference: ($0.21) – (brackets indicate current price is over target). If ELD meets the Morgans target it will return approximately -3% (excluding dividends, fees and charges – negative figures indicate an expected loss).