ELD – Morgans rates the stock as Hold

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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).

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