Tabcorp has sold its 11.6% interest in Jumbo Interactive ((JIN)) for $13.52 a share or $98m. A one-off net profit on the sale of $69m will be recorded in the first half and proceeds will be used to pay down debt.
Morgan Stanley assesses this has a marginal impact on earnings and suggests: it could signal pressure may be building on the balance sheet and, therefore, the company has had to sell one of its quality structural growth assets or, it could also mean Tabcorp has extracted the maximum value it perceives and will focus more on digital lotteries growth.
Morgan Stanley maintains its Equal-weight rating and $3.50 target. Industry view: Cautious.
Sector: Consumer Services.
Target price is $3.50.Current Price is $3.38. Difference: $0.12 – (brackets indicate current price is over target). If TAH meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges – negative figures indicate an expected loss).