Morgans highlights independent data shows first quarter industry road bike sales increased by 21% year-on-year. This is the second highest quarterly growth rate behind 3Q20 and around 12% above 1Q19 levels.
The broker lifts the rating to Add from Hold and the target to $3.18 from $2.70. This is due to an expectation for continuing strong demand across the industry and persistently tight inventory conditions, akin to the automotive industry, explains the analyst.
Morgans expects a net cash position at the end of FY21, placing the group well to payout around 55% of earnings in dividends, re-invest in inventory and look at any attractive acquisition targets that may arise.
Target price is $3.18.Current Price is $2.79. Difference: $0.39 – (brackets indicate current price is over target). If MTO meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges – negative figures indicate an expected loss).