First-half results revealed a decline in earnings from continuing operations of -16%. Citi forecasts underlying EBIT for the non-network business towards the midpoint of management’s guidance range of $390-430m.
Citi revises FY19 estimates to reflect the fact Aurizon has chosen to account for the implementation of the UT5 decision in FY19, rather than extend the regulatory uncertainty further. The broker expects an 18% lift in underlying EBIT in FY20.
As a result of the clearer outlook for the network earnings, the broker lifts its rating to Neutral from Sell and raises the target to $4.40 from $3.80.
Target price is $4.40.Current Price is $4.44. Difference: ($0.04) – (brackets indicate current price is over target). If AZJ meets the Citi target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).