CIMB Securities 31-Jan-14 CIMB has downgraded FY14 and FY15 earnings forecasts by 21%, reflecting weaker shipments and pricing growth in Australia and Asia. The company's first half result is an example of poor execution, the broker believes, and there's a risk of a growing inventory issue in the second half.
The Reduce rating is maintained and the price target is lowered to $3.20 from $4.00. Reduce
Macquarie 31-Jan-14 Treasury Wine yesterday cut its FY14 guidance by 17% based on weaker sales in Australia and a slowdown in China and the broker does not see conditions improving in the near term. The broker has also replaced its TWE analyst, pulling its rating back to Neutral pending a full review of the numbers.
Target falls to $4.00 from $5.75. Downgrade to Neutral from Outperform
Citi 31-Jan-14 The company has downgraded guidance because of reduced shipments to the US and a weak performance in Australia. Citi found there was little clarity on the de-stocking in the US and suspects the first half could reveal more bad news. The broker warns investors to be cautious.
Longer term, Citi thinks the stock represents an opportunity to buy the Australian wine industry at the bottom of the cycle, while the outlook for the US market is still favourable. The broker expects Asia to recover and this will be a large opportunity for Treasury Wine.
The Neutral rating is retained and the price target is reduced to $4.00 from $5.10. Neutral
BA-Merrill Lynch 31-Jan-14 It's been a disappointing six months for the broker. Merrills finds the trial of failed execution has spread from the US to Australia. The company has reduced FY14 earnings guidance and Merrills has downgraded forecasts by 23% for FY14, 30% for FY15 and 28% for FY16.
The price target is revised down to $5.50 from $10.00. At the current share price the stock is trading on multiples which are too low in the broker's view. At the revised target, the implied valuation of the company's assets is also low in the broker's opinion.
The broker maintains a Buy rating because the value of the company is not based on short-term earnings. Debt levels are low and while short-term earnings are under pressure Merrills thinks the longer-term risk is low.
JP Morgan 31-Jan-14 The company has issued its fourth consecutive profit warning, driven by volume declines in Australia and Asia. JP Morgan suspects there is a downside risk to FY14 guidance, given the high likelihood that challenging conditions persist.
The broker is concerned about potential inventory issues and the potential for any new CEO to further reduce guidance to reset expectations. The Neutral rating is maintained and the price target is reduced to $3.65 from $4.35.
UBS 31-Jan-14 Guidance has been updated. Earnings are negatively impacted by declines in volumes in Australia and New Zealand, slower US shipments and higher spending on marketing in Asia. This has been partly offset by a weaker Australian dollar.
UBS has reduced earnings forecasts but still suspects there's more downside risk, although the broker is comfortable with the company's capital position. Treasury Wine is losing share in Australia and in-house wine brands from the supermarkets are the likely culprits, UBS suspects. The broker remains concerned about the future of the Us business.
As a result of the update, the price target is revised down to $3.18 from $3.74 and the Sell rating is retained.
Sell
TWE Price at posting:
$3.68 Sentiment: Hold Disclosure: Held
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