Credit Suisse observes contract manufacturing was very weak in the first half while the volume erosion in packaging continues.
The broker regards the business as a restructuring story and its core packaging business undervalued, given the leading market position.
Estimates for earnings per share are downgraded -24-28% across the forecast period. Nevertheless, cash flow surpassed forecasts and was the best first half in that regard since the IPO.
Outperform rating maintained. Target is reduced to $3.30 from $3.60.
Target price is $3.30.Current Price is $2.49. Difference: $0.81 – (brackets indicate current price is over target). If PGH meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges – negative figures indicate an expected loss).