Credit Suisse lowers its rating for Smartgroup Corp to Neutral from Outperform. This follows the announced contract loss of a top 20 client, the Department of Education and Training Victoria.
While management estimates a FY23 revenue impact of less than -5%, the announcement was a surprise for the broker given long-standing salary packaging contracts rarely change hands. Nonetheless, no additional risk is inferred.
The target price is lowered to $7.05 from $8.58 on the contract loss and the application of a lower market multiple by the analyst.
Sector: Commercial & Professional Services.
Target price is $7.05.Current Price is $6.53. Difference: $0.52 – (brackets indicate current price is over target). If SIQ meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).
