Credit Suisse suspects the company may need equity of $500m, although it acknowledges it does not have a liquidity issue.
This would enable Tabcorp to set the balance sheet for a leverage ratio target of 2.5-3.0x and prepare for the acquisition of WA Wagering.
Estimates for earnings per share are downgraded -10-18% of the forecast period. Outperform maintained. Target is reduced to $3.20 from $4.25.
Sector: Consumer Services.
Target price is $3.20.Current Price is $2.77. Difference: $0.43 – (brackets indicate current price is over target). If TAH meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).