Morgans initiates Australia's Guzman y Gomez with 'add' rating

Guzman y Gomez

03/07/2024 06:00

** Analysts at Morgans initiate coverage on Australia's
Guzman y Gomez  GYG.AX  with "Add" rating and price target of
A$30.8 
    ** Broker sees FY26 EBITDA growth of 40.6%, with
acceleration in earnings expected to continue into FY27 
    ** GYG fastest-growing quick service restaurant in Australia
- Morgans
        ** Says fast food chain, which competes with Chipotle
 CMG.N  and Wingstop  WING.O , trades at higher EV/EBITDA
premium to other ASX-listed peers
    ** Brokerage believes co has far superior growth profile and
its multiples look more reasonable when compared to high-growth
U.S. peers
    ** We believe investors buying into GYG will be well
rewarded as co realises long-term growth potential and its
earnings benefit from strong operating leverage - Morgans
    ** Brokerage notes co has built growth foundations in three
major overseas markets - Japan, Singapore and U.S. 
        ** Co currently expecting to open 30 to 40 new
restaurants in Australia per annum 
    ** Stock began trading on June 20 at A$30, a 36.4% premium
to its IPO price of A$22    

 (Reporting by Rishav Chatterjee in Bengaluru)
 ((Rishav.Chatterjee@thomsonreuters.com;))