Morgan Stanley believes Caltex is becoming interesting for value investors, although suspects the stock will not outperform, given the softer guidance.
The magnitude of cost reductions is higher than the broker expected and provides some level of comfort should retail fuel margins continue to deteriorate.
The broker considers the property disposal strategy sensible and envisages some modest recovery in retail margins in the second half. Equal-weight maintained. Target is $24. Industry view is In-Line.
Target price is $24.00.Current Price is $23.95. Difference: $0.05 – (brackets indicate current price is over target). If CTX meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges – negative figures indicate an expected loss).