FY19 results were strong and net profit up 17%. FY20 guidance was softer than expected, with Macquarie Group suggesting net profit may be slightly down on FY19. Morgans reduces estimates for earnings per share by -5-7%.
Even accounting for management being typically conservative, the broker believes guidance is a downgrade on consensus expectations, pointing out the dividend in the second half was below forecasts and the pay-out ratio remains at the lower end of the target range of 60-80%.
Add rating maintained as the stock is considered inexpensive. Target is raised to $134.20 from $132.20.
Sector: Diversified Financials.
Target price is $134.20.Current Price is $126.74. Difference: $7.46 – (brackets indicate current price is over target). If MQG meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).
