The near-term outlook may be challenging but Morgans notes the focus has shifted to the possible winning of significant major projects. FY20 is expected to be the cyclical low point in earnings.
The broker changes lead analyst and re-bases forecasts for FY20-22. The ability to win major projects in Mozambique LNG, Adani’s Carmichael mine and the Cross River Rail in Queensland could increase valuation to $2.45 a share.
Following the share price appreciation, and with a fairly balanced risk/reward profile, the broker maintains a Hold rating. Target is raised to $2.25 from $1.63.
Target price is $2.25.Current Price is $2.20. Difference: $0.05 – (brackets indicate current price is over target). If WGN meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).