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.
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).