Credit Suisse assesses a de-merger of Endeavour Drinks would enable a reinvestment strategy independent of Woolworths. Hotels & liquor retail generate lower returns on capital than the supermarket business.
The parts of the business appear to be worth slightly more than the current combined group, in the broker’s assessment.
Credit Suisse makes an increase to the target, to $35.63 from $31.83, to reflect the likelihood of a de-merger proceeding. Underperform maintained.
Sector: Food & Staples Retailing.
Target price is $35.63.Current Price is $38.68. Difference: ($3.05) – (brackets indicate current price is over target). If WOW meets the Credit Suisse target it will return approximately -9% (excluding dividends, fees and charges – negative figures indicate an expected loss).