Bapcor has completed a $180m institutional placement which is expected to significantly reduce leverage. UBS notes the store network in Australia is fully operational and gross margins are steady.
UBS raises estimates for FY20 and FY21 to reflect a less significant earnings trough, offset by dilution.
The broker considers the company well-placed to deliver resilient earnings growth at an attractive valuation and retains a Buy rating. Target is reduced to $6.40 from $6.95.
Sector: Retailing.
Target price is $6.40.Current Price is $4.50. Difference: $1.90 – (brackets indicate current price is over target). If BAP meets the UBS target it will return approximately 30% (excluding dividends, fees and charges – negative figures indicate an expected loss).
