After Ruralco’s trading update Morgans reduces FY18 estimates for underlying net profit by -8.5%, to the mid point of guidance. The broker also takes a more conservative stance in regards to FY19 and FY20 assumptions.
The company has highlighted the impact of challenging seasonal conditions and its exposure to adverse changes in commodity prices.
Encouragingly, recent rainfall across Western Australia and southern Australia is expected to positively affect rural supplies over the fourth quarter. Add rating maintained. Target is reduced to $3.40 from $3.60.
Target price is $3.40.Current Price is $2.92. Difference: $0.48 – (brackets indicate current price is over target). If RHL meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).