Jefferies cuts PT as agricultural headwinds weigh

Costa group

11/01/2022 19:38

** Analysts at brokerage firm Jefferies cut PT on Costa
Group Holdings Ltd  CGC.AX  to A$3.25 from A$3.60, retain a
"hold" rating
    ** CGC is due to report FY21 results on Feb 22
    ** Jefferies says the focus for FY21 will be on outlook,
growth in spending and labour availability, as Australia's
record levels of COVID-19 infections threaten supply chains
 urn:newsml:reuters.com:*:nRscf0nnba urn:newsml:reuters.com:*:nL1N2TR056
    ** CGC in late June said it expects CY21 EBITDA and NPAT to
be marginally ahead of CY20  urn:newsml:reuters.com:*:nASXSLQQy
    ** Jefferies forecasts FY21 revenues of A$1.21 bln ($872.53
mln), EBITDA of A$218 mln and an underlying NPAT of A$65 mln
    ** Brokerage also awaits commentary for FY22 on whether
CGC's berries and citrus products pricing will continue to be
positive
    ** Says stock is at a disadvantage as weather conditions,
commodity pricing, labour availability and disease are all
largely outside its control in the volatile agriculture market
    ** Pre-tax ROFE (return on capital employed) averaged 11.3%
over the past 3 years and brokerage assumes a recovery to about
14% in FY22, then nothing beyond
    ** About seven of 11 analysts rate the stock "buy" or higher
and four rate "hold"; their median PT is A$3.62 – Refinitiv data
    ** Stock lost 24.5% in 2021

($1 = 1.3868 Australian dollars)

 (Reporting by Yamini C S)
 ((Yamini.CS@thomsonreuters.com;))