BGA – Morgans rates the stock as Hold

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As dry conditions continue and farming costs increase, Australia’s milk supply is expected to decline again in FY20. Dairy Australia forecasts Australian milk supply to contract a further -3-5% in FY20 after declining by -7-9% in FY19.

Morgans reduces FY20 estimates for net profit by -15.9%. However, in FY20 and FY21 the company should benefit from improved global dairy prices as well as its growth projects. The broker maintains a Hold rating and reduces the target to $4.60 from $5.12.

Sector: Food, Beverage & Tobacco.

Target price is $4.60.Current Price is $4.73. Difference: ($0.13) – (brackets indicate current price is over target). If BGA meets the Morgans target it will return approximately -3% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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