Strengthening a key gap in the chardonnay portfolio, according to Morgans, Treasury Wine Estates will acquire Frank Family Vineyards for -$432m. Given the target’s high margins, the analyst now forecasts the company will be two years earlier for its own margin target.
The broker highlights the acquisition is immediately EPS accretive and US$5m of cost synergies are expected by FY24. Recent share price weakness is seen as a buying opportunity and Morgans retains its Add rating and lifts its target price to $14.06 from $13.90.
Sector: Food, Beverage & Tobacco.
Target price is $14.06.Current Price is $11.54. Difference: $2.52 – (brackets indicate current price is over target). If TWE meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges – negative figures indicate an expected loss).
