Morgan Stanley suspects the outlook has deteriorated since the company downgraded its FY19 guidance in May. Headwinds ensue from Brexit, US tariffs and weak Australian housing construction.
Envisaging that commentary at the results may be disappointing, Morgan Stanley downgrades to Equal-weight from Overweight. Increased tariffs on goods from China are likely to place further pressure on the company’s US margins in FY20.
The broker also suspects the risks are to the downside for underlying economic activity in the UK and ultimately to margins for the John Guest operations. Target is reduced to $3.75 from $5.00. Industry view is Cautious.
Sector: Capital Goods.
Target price is $3.75.Current Price is $3.16. Difference: $0.59 – (brackets indicate current price is over target). If RWC meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges – negative figures indicate an expected loss).