Citi has initiated coverage of Australian shipbuilder Austal with a maiden Buy rating and a $2.76 price target. Fully admitting this type of business is highly cyclical and volatile, the analysts nevertheless suggest now seems like a good time to get on board.
On Citi’s calculations, the shares are trading at a -17% discount to peers, but with 75% faster operational profits (EBIT) projected for FY19-FY21, supported by a projected steep rise in margins. To obtain a fully informed picture, the analysts combined forces with Citi’s US-based Aerospace & Defense analysts.
Sector: Capital Goods.
Target price is $2.76.Current Price is $2.15. Difference: $0.61 – (brackets indicate current price is over target). If ASB meets the Citi target it will return approximately 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).
