Aurizon’s result was solid, the broker suggests, as network earnings normalised and the bulk division posted a beat. Strong cash generation has led to an expansion of the buyback, given meaningful growth opportunities are hard to find.
The downside is coal contract repricing is offsetting underlying growth. Upside is limited to cost cutting, the broker notes, given limited organic growth. The broker thus sees the stock as overvalued. Underperform retained. Target rises to $5.54 from $5.33.
Sector: Transportation.
Target price is $5.54.Current Price is $5.58. Difference: ($0.04) – (brackets indicate current price is over target). If AZJ meets the Macquarie target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).
