UBS sees the company's US review results as a “mix of positives and negatives” with an extra $110m in investment in pallet quality, which is expected to impact CHEP's profitability over the next three years, the analysts say.
As for positives, the broker says management guidance for around 25% pre-tax earnings margin is conservative, with better pallets predicted to allow for faster market penetration.
Near term earnings forecasts have been cut by 6% in FY10 and FY11 due to the pallet costs and the stronger AUD.
Target falls 30c to $8.90. Sector: Commercial Services and Supplies.
Target price is $8.60.Current Price is $7.45. Difference: $1.15 - (brackets indicate current price is over target). If BXB meets the UBS target it will return approximately 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).
BXB Price at posting:
$7.06 Sentiment: None Disclosure: Not Held
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