UBS believes the government decision to support the childcare industry makes sense. The $301m equity raising has dramatically improved the balance sheet and should support the business through a period of weak conditions, the broker assesses.
This should also provide additional ability to fund acquisitions. On balance, UBS considers the risk/return is skewed to the upside and upgrades to Buy from Neutral. Target is reduced to $1.30 from $1.75.
Sector: Consumer Services.
Target price is $1.30.Current Price is $1.00. Difference: $0.30 – (brackets indicate current price is over target). If GEM meets the UBS target it will return approximately 23% (excluding dividends, fees and charges – negative figures indicate an expected loss).
