awb - oversold?, page-4

AWB Upgraded To Outperform
May 06 2005 - Australasian Investment Review – (AIR)

Taking advantage of the fact the stock is now trading at a significant discount to its target price, Macquarie has upgraded its rating on AWB Ltd (AWB) to Outperform from Neutral.


Management has confirmed this year’s profit result is likely to be similar to last year’s, with the broker suggesting the reduced profit contribution from a smaller crop will be offset by continued synergies from the Landmark deal, Pool Management and the Geneva grain trading business.

The broker notes there is also potential for the company to lift its dividend in FY05 from last year’s 25c, given it has recently recorded a profit of $42m from the sale of its holding in Futuris (FCL).

The broker is forecasting EPS growth of more than 12% in FY06, based on the expectation of a higher crop next year, a definite possibility given Western Australia is enjoying its best start to a cropping season in decades.

The broker’s price target is $4.95, while its valuation is $4.91.

Two out of the other five top ten equity advisers who cover the stock have a positive rating as well, the other three have stuck to a Neutral thus far.