Citi 23/12/2009 1 Buy, High Risk $8.00 38.6% Graincorp's FY10 earnings guidance and the downward revision of its grain receivals outlook implies consensus earnings downgrades of 15%-30%, notes Citi. However, the broker notes the malt earnings guidance was ahead of its previous expectations and should at least help ease concerns over the sustainability of malt profitability.
Still, Citi's FY10 net profit forecast is cut by 26% on the earnings downgrade and FY11-12 fall by around 9% on changes to the broker model assumptions. This results in the target price dropping to $8.00 (from $9.20)
With the bad news out of the way, the broker sees limited further downside risk to FY10 earnings given the timing of the update and level of grain receivals year to date. Buy call maintained.
JP Morgan 23/12/2009 1 Overweight $8.20 42.1% Following updated guidance from management the broker has adjusted its earnings estimates lower, though there is no impact on its price target from the changes.
Valuation remains attractive on its new numbers and with positive earnings revisions expected through FY10 the broker retains its Overweight rating.
GNC Price at posting:
$5.76 Sentiment: LT Buy Disclosure: Held
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