After being whacked lower on Wednesday following the release of a shockingly poor trading update for the December half-year and weak guidance for 2019-20 as a whole, shares in Treasury Wine Estates’ shares rebounded modestly yesterday as analysts looked again at the company’s prospects.
The shares closed up 5.2% at $13.000 – still more than 20% under the close on Tuesday before the update was issued later that evening.
Analysts at Citi Research decided to upgrade its rating from sell to neutral given it now trades on a price to earnings multiple of 17.5 times.
“The stock could trade sideways from here given the lack of clarity on both the US and China demand outlook and until new CEO settles into his desk,” Citi told clients in an updated note.
Citi analysts also said that in order to be more positive on TWE, it needs to see “pricing power, better cash flow realisation and more brands reach scale in China.”
Citi says it now has a price target on the stock of $13.70.
