Morgans is not surprised at the downgrades to the earnings outlook given the deterioration in the metallurgical coal market. The broker downgrades 2020-21 estimates for earnings per share by -8-22%.
While the stock is considered cheap, the broker suspects the short-term coal market risk will continue to deter marginal momentum investors. The valuation remains very sensitive to ongoing volatility in physical markets.
However, the broker is positive about the stock over the longer term and maintains an Add rating. Target is reduced to $3.50 from $3.94.
Sector: Materials.
Target price is $3.50.Current Price is $2.24. Difference: $1.26 – (brackets indicate current price is over target). If CRN meets the Morgans target it will return approximately 36% (excluding dividends, fees and charges – negative figures indicate an expected loss).
