First-half results were ahead of expectations and show the benefits of recent cost reductions and improvement in operations.
UBS retains a Buy rating to reflect the leverage to a cyclical upswing, given the FY21 winter crop is likely to be above average after three drought-affected years, as well as the de-risking of the balance sheet.
While the stock trades on elevated price/earnings multiples the broker notes it offers a 10% free cash flow yield on FY21 estimates. Target is reduced to $4.50 from $9.40, post the de-merger of the malt division.
Sector: Food, Beverage & Tobacco.
Target price is $4.50.Current Price is $3.99. Difference: $0.51 – (brackets indicate current price is over target). If GNC meets the UBS target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
