Orora’s first half result was comfortably ahead of Morgans expectations and the broker increases underlying earnings forecasts by between 1-2% for FY21-23. Downgrades to Australasia earnings from lower wine volumes were more than offset by upgrades for North America.
North America looks to the broker like it is finally turning around (the first time in three years it recorded growth), though the higher Australian dollar is currently weighing.
Management has guided to higher earnings in FY21 with North America earnings (EBIT) to be higher and Australasia earnings (EBIT) to be broadly in-line with FY20 (the second half will be impacted by lower wine bottle exports to China and the smaller 2020 wine vintage).
Hold rating and the target is increased to $3 from $2.61.
Sector: Materials.
Target price is $3.00.Current Price is $2.88. Difference: $0.12 – (brackets indicate current price is over target). If ORA meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges – negative figures indicate an expected loss).
