First-half results have cleared any doubts about the company’s operating leverage, Citi acknowledges. Strong growth was driven by higher volumes, improved product mix, and better manufacturing. Market conditions are improving and price/cost headwinds fading.
However, the broker notes further delays with Burrup. Burrup remains a swing factor, with a negative impact on cash flow forecast by the company in FY19 of -$40-45m. Burrup’s operating earnings (EBITDA) are forecast to be $45m in FY21.
Citi upgrades to Neutral from Sell and raises the target to $20 from $16.
Sector: Materials.
Target price is $20.00.Current Price is $19.42. Difference: $0.58 – (brackets indicate current price is over target). If ORI meets the Citi target it will return approximately 3% (excluding dividends, fees and charges – negative figures indicate an expected loss).
