2019 guidance for operating earnings (EBITDA) of $371-401m is -15% below UBS estimates. The broker notes the business is, by its nature, volatile and that is reflected in the high PE discount to the market.
However, the company has reported positive aspects including a strong top line, with volumes up 4.3%.
Margin pressure from costs and competition appears to be the main reason why the guidance was much lower than UBS estimated.
While reducing estimates by -11-20% UBS retains a Buy rating, envisaging significant earnings opportunities over the next 2-3 years. Target is reduced to $2.25 from $2.65.
Sector: Energy.
Target price is $2.25.Current Price is $1.96. Difference: $0.29 – (brackets indicate current price is over target). If VEA meets the UBS target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
