AUB has downgraded FY19 profit growth guidance to 3-5% growth from a prior 7-12%, citing substantially lower NSW workers comp case volumes and an over-run in the cost of a new underwriting agency IT system. The broker is disappointed by the downgrade but notes it is isolated to these two issues.
The core businesses of broking and underwriting continue to perform to expectation, although organic growth is modest. The broker believes AUB is now oversold after yesterday and retains Outperform. Target falls to $12.46 from $13.77.
Target price is $12.46.Current Price is $10.37. Difference: $2.09 – (brackets indicate current price is over target). If
AUB meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges – negative figures indicate an expected loss).