ARF – Macquarie rates the stock as Neutral

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FY19 earnings are in line with expectations. FY20 distribution guidance of 14.3c per security was reaffirmed.

Macquarie considers the child care subsidy has largely been captured in the results and the company will benefit from moderating supply and a continued shift in structural demand.

The company continues to pursue opportunities outside of early learning centres, where the financial returns are similar. Valuation remains the hurdle and the broker retains a Neutral rating. Target is reduced to $2.78 from $2.80.

Sector: Real Estate.

Target price is $2.78.Current Price is $2.81. Difference: ($0.03) – (brackets indicate current price is over target). If ARF meets the Macquarie target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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