NEC – Credit Suisse rates the stock as Outperform

The extent of the TV weakness, highlighted at the AGM, was greater than Credit Suisse expected. The company is now guiding to low single-digit growth in FY20 operating earnings (EBITDA). Growth is expected to be skewed to the second half.

Guidance for the first half indicates operating earnings will be down -10%. The broker reduces TV estimates in line with guidance and now incorporates a -5% decline in the free-to-air market in FY20.

Outperform rating maintained. Target is reduced to $2.05 from $2.10.

Sector: Media.

Target price is $2.05.Current Price is $1.74. Difference: $0.31 – (brackets indicate current price is over target). If NEC meets the Credit Suisse target it will return approximately 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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