Costa Group has announced its fourth downgrade for the year, now expecting 2019 net profit of $28m and operating earnings (EBITDA) of $98m. Macquarie notes tomatoes are the only produce category to meet second half expectations.
While the company has previously highlighted the risks to the downside in blueberries, mushrooms and raspberries there is also adverse yield and size impacts in citrus and avocado.
Macquarie changes analysts and lowers the rating to Underperform from Neutral, noting that earnings visibility continues to be limited. Target is reduced to $2.51 from $3.40. Moreover, 2020 guidance seems optimistic in the broker’s opinion.
Sector: Food, Beverage & Tobacco.
Target price is $2.51.Current Price is $3.46. Difference: ($0.95) – (brackets indicate current price is over target). If CGC meets the Macquarie target it will return approximately -38% (excluding dividends, fees and charges – negative figures indicate an expected loss).
