Morgans notes competition is heating up, as opening farmgate milk prices for the new season are at record high levels and processors are effectively overpaying for milk. Margins would fall should global dairy prices fall materially or the Australian dollar rise, explains the broker.
The analyst feels the share price weakness more than reflects the extent of Morgans’ earnings (EBITDA) downgrade of -6.7% for FY22. The target price falls to $6.35 from $6.80. The Add rating is unchanged.
Sector: Food, Beverage & Tobacco.
Target price is $6.35.Current Price is $5.34. Difference: $1.01 – (brackets indicate current price is over target). If BGA meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges – negative figures indicate an expected loss).
