Over The Wire Holdings has provided a trading update which shows that FY21 earnings (EBITDA) are likely to come in around -10% below expectations. This, once again, is due to a slippage in the transactional side of the business, notes the broker.
Morgans decides to remove all transactional business (low value) from forecasts and it will now present potential upside risk to the new forecasts. This business is considered a distraction from the core, higher quality recurring business.
The Hold rating is unchanged and the target price increases to $4.66 from $4.25 after adjustments for lower earnings, offest by a change in valuation methodology.
Sector: Software & Services.
Target price is $4.66.Current Price is $4.82. Difference: ($0.16) – (brackets indicate current price is over target). If OTW meets the Morgans target it will return approximately -3% (excluding dividends, fees and charges – negative figures indicate an expected loss).
