The AGM update provided a mixed outlook, in Deutsche Bank's view. Although FY16 cash earnings guidance was re-affirmed, the UK has had a soft start, largely from staff integration issues and lower case intake.
Deutsche Bank continues to expect the share price will be under pressure in the short term, given the strong second half earnings skew, weak cash flow in the first half and lost investor confidence.
The broker retains a Buy rating on valuation grounds. Target is lowered to $3.35 from $5.00.
Target price is $3.35 Current Price is $2.15 Difference: $1.2
If SGH meets the Deutsche Bank target it will return approximately 56% (excluding dividends, fees and charges).
Current consensus price target is $4.01, suggesting upside of 98.6%(ex-dividends)
The company's fiscal year ends in June.
SGH Price at posting:
$2.04 Sentiment: Hold Disclosure: Held
