Sales inflow was $52m in the September quarter, up 41% on the prior September quarter albeit down on the stellar June quarter. While execution by the new management team has impressed Morgans, a further leg up in sales growth remains key to a re-rating.
The broker downgrades estimates for earnings per share by -2% in FY19 and -10% in FY20 on more conservative sales forecasts. Morgans notes the company, while young, is now profitable and at an inflection point where performance can be significantly ramped up.
Add rating maintained. Target is reduced to $1.33 from $1.44.
Target price is $1.33.Current Price is $1.07. Difference: $0.26 – (brackets indicate current price is over target). If GDG meets the Morgans target it will return approximately 20% (excluding dividends, fees and charges – negative figures indicate an expected loss).