Inghams has provided an update as part of a conference, with a key message of a fall in the wheat price and a recovery in New Zealand. Citi suspects there still could be downside to FY20 estimates for earnings, given the run rate over the second half. Moreover, retail prices for poultry continue to fluctuate.
The broker retains a Sell rating and points out, while the focus will remain on cash flow and dividends, more attention is likely to be paid to brand and new product development when the new CEO unveils his strategy in the June quarter, and this may crimp near-term margins. Target unchanged at $3.85.
Sector: Food, Beverage & Tobacco.
Target price is $3.85.Current Price is $4.22. Difference: ($0.37) – (brackets indicate current price is over target). If ING meets the Citi target it will return approximately -10% (excluding dividends, fees and charges – negative figures indicate an expected loss).
