InvoCare’s first-half result was weaker than Morgans had expected, with operating earnings down -23% to $48.6m.
The analyst notes the result was driven by a decline in the number of deaths, government restrictions on the number of funeral attendees and a largely fixed cost base.
The company declared a 5.5cps dividend and announced the deferred 2H19 dividend will be paid in October.
Morgans states the long-term fundamentals remain strong with further opportunities from regional acquisitions and pet cremations.
The Add rating is maintained. The target price is decreased to $11 from $13.10.
Sector: Consumer Services.
Target price is $11.00.Current Price is $9.77. Difference: $1.23 – (brackets indicate current price is over target). If IVC meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).
