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AVG - Morgans rates the stock as Add

PUBLISHED

2021-04-29

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Australian Vintage delivered third quarter results in-line with management's expectations. While reported profit (NPAT) guidance has been narrowed, Morgans assesses underlying performance, adjusted for  self generating and regenerating assets remains strong.

The broker assesses a strong vintage in 2021 and lower grape prices will provide a positive margin tailwind over FY22/23. Additionally, increased distribution, further sales mix improvements and efficiency gains are expected to support ongoing earnings growth.

UK/Europe/Americas segment sales have risen 12% on the pcp, with trading in its core UK market very strong, explains the analyst. A&NZ sales did slow over the 3Q21 though the weakness has been more weighted to lower margin cask sales, concludes Morgans.

The Add rating and $0.83 target are maintained.

Sector: Food, Beverage & Tobacco.

 

Target price is $0.83.Current Price is $0.74. Difference: $0.09 - (brackets indicate current price is over target). If AVG meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).