The company has reduced earnings expectations for FY20, abandoning the likelihood of a strong rebound in premium ad volumes in the current half. An automatic price rise of around 8% has also been postponed.
Morgans downgrades forecasts to reflect this. The company believes predicting advertising volumes is now impossible.
The balance sheet is clean, the broker notes, and there is no refinancing risk so the business should rebound strongly once the the crisis has passed.
As the stock is close to valuation Morgans upgrades to Hold from Reduce. Target is reduced to $86.93 from $89.93.
Target price is $86.93.Current Price is $81.00. Difference: $5.93 – (brackets indicate current price is over target). If REA meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).