GUD – UBS rates the stock as Neutral

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GUD Holdings will acquire AMA Group’s ((AMA)) automotive components and accessories division (ACAD) for $70m, to be funded by an institutional placement and share purchase plan.

UBS considers the business is a strong strategic fit within the GUD portfolio and will provide diversification benefits.

The broker updates operating assumptions, incorporating the acquisition and incremental trading update and forecasts $40m in revenue in the second half and a 17% incremental margin. Neutral rating and $12.50 target retained.

Sector: Consumer Durables & Apparel.

Target price is $12.50.Current Price is $11.85. Difference: $0.65 – (brackets indicate current price is over target). If GUD meets the UBS target it will return approximately 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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