GDG – Morgans rates the stock as Add

December quarter sales were solid, Morgans observes. The company has now cycled its higher cost base associated with Project Clearwater.

Estimates for earnings per share are downgraded by -15% for FY19 and FY20, reflecting the effect of recent market declines on forecast fund levels.

Pursuant to recent regulatory changes in superannuation, the broker believes alternative low tax investment options such as investment bonds will obtain significant structural growth.

Add rating maintained. Target is reduced to $1.13 from $1.33.

Sector: Insurance.

Target price is $1.13.Current Price is $0.81. Difference: $0.32 – (brackets indicate current price is over target). If GDG meets the Morgans target it will return approximately 28% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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