While challenging conditions continue to impact AMA Group, with supply constraints and increasing costs of parts and labour adding pressure, UBS notes signs of improvement in capacity utilisation.
The broker highlighted the cost of parts and labour are 5% and 20% higher than in FY19, and while the company’s investor day laid out a clear path to earnings improvement according to the broker, UBS expects near-term cost inflation, and the ability to pass this through, will remain a key challenge.
The Neutral rating is retained and the target price decreases to $0.23 from $0.29.
Sector: Retailing.
Target price is $0.23.Current Price is $0.21. Difference: $0.02 – (brackets indicate current price is over target). If AMA meets the UBS target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
