Credit Suisse rates COF as Outperform - Coffey International has advised of an overstatement in its FY07 accounts that will result in a reduction of its net profit of between $3.5m and $4.5m, following the implementation of a new accounting system at the start of FY07. Analysts at Credit Suisse are scratching their head over how a 37% to 53% overstatement of net profit occurs. The company has also said that FY07 was down by up to 27% year-on-year instead of being up by 11% as reported previously.
Credit Suisse analysts are also concerned about the fact that the error was identified at least three months ago and management has since presented an investor presentation. Coffey has restated its guidance for FY08 earnings (pre-share based payments) to be between $42m and $46m and management expects to generate $70m earnings in FY09.
Credit Suisse says its forecasts remain unchanged but notes “confidence in them is diminished”. The target price has dropped to $3.20 from $3.60.
Target price is $3.20 Current Price is $2.30 Difference:$0.90 - (brackets indicate current price is over target). If COF meets the Credit Suisse target it will return approximately 39% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June. Credit Suisse forecasts a full year FY08 dividend of 19.10 cents and EPS of 25.40 cents. At the last closing share price the estimated dividend yield is 8.30%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.06.
COF Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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