At first glance FY19 operating earnings (EBITDA) beat estimates with more cost reductions and better income in the enterprise division. First-time FY20 operating earnings guidance is $735-750m, also ahead of Morgan Stanley’s forecasts.
The broker considers the shares are detached from the fundamentals and heavily influenced by the Federal Court decision on the merger with Vodafone Australia.
The broker’s bull case, should the merger proceed, is $8.70 a share while, conversely, should it not proceed the valuation is $5 a share.
Rating is Equal-weight. Target is $6.85. Industry view is In-Line.
Sector: Telecommunication Services.
Target price is $6.85.Current Price is $6.41. Difference: $0.44 – (brackets indicate current price is over target). If TPM meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).