Fundamentals remain strong - see below extract from MS broker report
Concerns about whether a deal would be completed have overshadowed an improved earnings outlook for Link.
On Tuesday Morgan Stanley analysts upgraded its share price target from $4.40 to $4.90.
That increased price target, it said was mainly driven by an increase in the market value of PEXA, which has had a strong run recently in addition to a valuation uplift as a result of the stronger than initially forecast operating earnings. The broker said that after several years of negative earnings growth, Link’s preliminary results, released on Monday, showed “operating earnings are starting to stabilise”.
The forecast earnings growth of about 10 per cent “suggests a stronger recovery than we or consensus had previously expected,” the broker said. “We see medium-term structural growth for Link in superannuation and fund administration, though we think Link needs a multi-year investment programme to deliver on these options,” Morgan Stanley’s analysts said.
