The company has revised FY19 operating earnings guidance (EBITDA) to $350-360m and operating net profit to $195-205m. This is below Morgans’ estimates. Issues reflect the impact of Brexit on the asset services business and headwinds in funds administration from client migration, as well as elevated resourcing costs.
While the issues are largely cyclical/one-off, the broker observes they do flow into FY20 in varying degrees and create some uncertainty. Morgans maintains an Add rating and believes the stock offers significant long-term value. Target is reduced to $7.34 from $8.27.
Sector: Software & Services.
Target price is $7.34.Current Price is $5.81. Difference: $1.53 – (brackets indicate current price is over target). If LNK meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).
