Viva Energy’s Sep Q update revealed refiner margins ahead of forecasts but retail margins remaining soft. This comes out as a net positive, with UBS suggesting 9% upside to consensus forecasts on better refiner margins with some offset from weak retail.
On a 13x 2020 earnings multiple the broker believes the market is under-appreciating the operating leverage from improving alliance volumes. Buy and $2.65 target retained.
Target price is $2.65.Current Price is $2.07. Difference: $0.58 – (brackets indicate current price is over target). If VEA meets the UBS target it will return approximately 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).