Chevron has commenced legal proceedings in respect of signage at 177 retail sites across Australia. Ampol’s licence agreement with Chevron was terminated at the end of 2019 with the work-out period up to 2022 and Ampol has started removing the Caltex brand.
Morgan Stanley considers the risk of the proceedings relatively low but suspects Ampol may be forced to remove the sites quicker than it previously intended.
The broker also notes the stock has traded poorly since the August results, although it is likely the balance sheet will be close to “buyback territory” by the end of the year.
Morgan Stanley retains an Overweight rating with a $31 target. Industry view is Cautious.
Target price is $31.00.Current Price is $25.62. Difference: $5.38 – (brackets indicate current price is over target). If ALD meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges – negative figures indicate an expected loss).