After a FY21 trading update, Credit Suisse points out impairments to Burrup and the EMEA division do not appear to reflect a fundamental change in Orica’s outlook. The broker retains its Outperform rating and lifts its target price to $16.11 from $15.66.
After management comments, the broker feels volume is possibly better and ammonia cost impacts not as material as previously forecast.
While gas and ammonia costs are likely to remain a headwind through to the first half of 2022, contract cost pass through should result in a recovery of most of these costs in the second half.
Target price is $16.11.Current Price is $12.04. Difference: $4.07 – (brackets indicate current price is over target). If ORI meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges – negative figures indicate an expected loss).