Distribution centre costs were largely responsible for a greater impact upon Adair’s margins than Morgans had anticipated. Also, management’s amended 1H earnings (forecast) was an -8-10% miss versus the analyst’s prior forecast.
The broker lowers its target price to $3.70 from $4.80 though highlights the trading update was more disappointing than disastrous. It’s thought the estimated FY23 price earnings ratio of 7.6x and currently attractive dividend yield are enough to retain an Add rating.
Target price is $3.70.Current Price is $2.94. Difference: $0.76 – (brackets indicate current price is over target). If ADH meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).