VRL - Deutsche Bank rates the stock as Buy
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The stock has underperformed the market materially over the last two months, in large part because of concerns about the impact of the Dreamworld incident on theme parks.
Deutsche Bank notes the impact is difficult to determine but retains a more relevant concern about the high level of gearing and weak cash flow at Village Roadshow.
The broker envisages a need to reduce debt through asset sales or an equity issue and believes the stock has meaningful latent asset value, which could deliver valuation upside through divestments.
Rating is upgraded to Buy from Hold. Target is reduced to $4.75 from $4.90.
Target price is $4.75.Current Price is $4.33. Difference: $0.42 - (brackets indicate current price is over target). If VRL meets the Deutsche Bank target it will return approximately 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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