While Costa Group’s headline first half FY21 results were pre-released, the produce segment was weaker than Morgans expected, yet the International business materially exceeded expectations.
FY21 guidance was reiterated and Morgans notes a far stronger second half FY21 produce result will be required to deliver it.
The broker also notes Costa Group will be supported by the on-year citrus crop and solid growth in the main berry season is expected.
Morgans FY21 earnings forecast is lowered 2.2% and net profit falls 7.7%, with more conservative produce assumptions offsetting material International upgrades.
Morgans upgrades Costa Group to Add from Hold, and the target price is lowered to $3.70 from $3.81.
Sector: Food, Beverage & Tobacco.
Target price is $3.70.Current Price is $3.17. Difference: $0.53 – (brackets indicate current price is over target). If CGC meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).
