ARB Corp is considered well-placed to benefit from the shift in consumer preferences towards sports utility vehicles and four-wheel-drive cars. However, Citi finds the peer multiple demanding amid short-term headwinds stemming from a decline in first half Australian 4×4 sales.
FX pressure also suggests the near-term upside is limited. Citi expects sales growth to slow over the second quarter and margin pressure to continue over the first half. The company will report its results on February 18.
The broker reduces FY20-22 estimates for net profit by -5-9%. Neutral rating maintained. Target is raised to $19.45 from $18.43 after a change in valuation methodology and following the transfer of coverage to another analyst.
Sector: Automobiles & Components.
Target price is $19.45.Current Price is $19.45. Difference: $0.00 – (brackets indicate current price is over
target). If ARB meets the Citi target it will return approximately 0% (excluding dividends, fees and charges – negative figures indicate an expected loss).