UBS reinstates coverage with a Buy rating and $1.85 target. The broker assesses the company’s regulated electricity and gas networks face a reduction in the rates of return at the forthcoming regulatory re-sets.
However, the first re-set does not commence until FY22. Despite lower regulatory returns driving flat regulated earnings over FY20-24, UBS forecasts 2.3% compound growth in group earnings that will support a distribution growth rate of 1.5% over the same period.
Sector: Utilities.
Target price is $1.85.Current Price is $1.76. Difference: $0.09 – (brackets indicate current price is over target). If AST meets the UBS target it will return approximately 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).
