The FY20 result for Reece was slightly above Morgans expectations, despite underlying earnings margins falling -70 basis points to 8.9%.
The broker’s positives were an above-consensus dividend and operations have continued to trade during the pandemic.
Morgans increases FY21 earnings estimates by 42% and notes the balance sheet improved following the $647m capital raising in April, leaving capacity for further acquisitions.
The total DPS of 12 cents was above the consensus of the broking community.
The Hold rating is maintained and target price is increased to $11.60 from $9.
Sector: Capital Goods.
Target price is $11.60.Current Price is $12.40. Difference: ($0.80) – (brackets indicate current price is over target). If REH meets the Morgans target it will return approximately -7% (excluding dividends, fees and charges – negative figures indicate an expected loss).
