Analysts uncertain about earnings impact of Costa Group's Citrus update

Costa group

12/07/2022 01:21

** Analysts find Australia's horticulture co Costa Group
Holdings'  CGC.AX  operations update "sweet and sour" and remain
uncertain about the future earnings impact of recent weather
events
    ** Co said results for first half of 2021 are expected to be
in line with co's expectations  urn:newsml:reuters.com:*:nASX57dZkv
    ** Co added that its 2PH business is predominantly operating
in line with expectations with volumes above forecast, however
some quality issues have been encountered in the citrus
portfolio due to weather events occurring over recent weeks
    ** Jefferies cuts PT on Costa to A$2.90 from A$3.45, retains
"hold" rating
    ** With no guidance from CGC on the profit impact of the
citrus issue, Jefferies assumes that Citrus comprises 22% of
group revenues and revises FY22 revenues and EBITDA estimates
downwards by 2% and 13% respectively
    ** Jefferies notes horticulture is the riskiest agriculture
sector and a one-off issue has materially impacted CGC earnings
again
    ** Whilst no carryover to FY23 is likely, it raises the
question, what might next year's event be - Jefferies 
    ** Morningstar maintain fair value estimate of A$3.40 and
says the realised impact on pricing recent weather events cannot
be determined until the citrus season has progressed    
    ** Nine of 13 analysts rate the stock "buy" or higher, three
"hold" and one rates it "sell"; their median PT is A$3.65 -
Refinitiv data
    ** As of last close, stock down 12.5% this year

 (Reporting by Himanshi Akhand in Bengaluru)
 ((Himanshi.Akhand@thomsonreuters.com;))