Challenger has pre-released its first-half profit result and updated FY19 guidance. New guidance is -8% below the prior range and blamed on market volatility, which the broker finds disappointing given consensus was already set at the low end. Guidance may prove conservative nonetheless, given the new CEO has just started.
The broker cuts FY19-20 earnings forecasts by -11-13% and its target to $10.60 from $12.50. With Challenger trading at a -13% discount to its five-year average PE, the broker retains Outperform.
Sector: Diversified Financials.
Target price is $10.60.Current Price is $7.65. Difference: $2.95 – (brackets indicate current price is over target). If CGF meets the Macquarie target it will return approximately 28% (excluding dividends, fees and charges – negative figures indicate an expected loss).