Motorcycle Holdings’ first-half guidance indicates to Morgans strong margins are the key driver of earnings strength along with strong volume. Also, new brands and dealerships are considered contributors to earnings strength.
The company expects current volumes are sustainable.
The broker sees the balance sheet as being in a strong position and notes dividends will recommence in the first half. Assuming a 60% payout ratio, the analyst calculates an over 7% yield at the current price.
Morgans lifts EPS forecasts by 17% in FY21 and around 6% for FY22 and FY23.
The Hold rating is unchanged and the target is increased to $2.81 from $2.67.
Target price is $2.81.Current Price is $2.59. Difference: $0.22 – (brackets indicate current price is over target). If MTO meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).