While Inghams Group is a defensive stock Macquarie finds better options are available in times of greater volatility. The broker believes the growth cycle in markets has peaked and downgrades to Neutral from Outperform.
Some uncertainty is created by a major retail contract that is up for renewal in the first half of FY22 and Macquarie suspects the customer could be 37% of group revenue.
A large proportion of volume is unlikely to be at risk, the broker asserts, but there remains some risk of either volume loss or margin pressure. Target is raised to $4.03 from $3.98.
Sector: Food, Beverage & Tobacco.
Target price is $4.03.Current Price is $3.99. Difference: $0.04 – (brackets indicate current price is over target). If ING meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).
