ABC – Morgan Stanley rates the stock as Overweight

Adbri’s first-half revenues, impacted by bushfires and lower residential demand were -7% versus last year. Operating income was ahead of Morgan Stanley’s estimate by 11%. A dividend of 4.75c was declared.

The broker considers the result solid and the company well placed to benefit from the stimulus in infrastructure. FY20 operating income (EBIT) is forecast is increased by 6% to $161m, reflecting a better outlook.

Overweight rating and $3.20 target maintained. Industry view: Cautious.

Sector: Materials.

Target price is $3.20.Current Price is $2.40. Difference: $0.80 – (brackets indicate current price is over target). If ABC meets the Morgan Stanley target it will return approximately 25% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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