Jefferies cuts PT on Australia's Reliance Worldwide as inflation, rate-hike bets weigh

Reliance Worldwide

02/05/2022 01:53

** Jefferies cuts price target on plumbing products maker
Reliance Worldwide Corp  RWC.AX  to A$4.90 from A$5.70, retains
"buy" rating
    ** Co said on Friday rising interest rates, inflationary
pressures, and supply chain issues are "potential headwinds" for
medium term
    ** Logged a 14% jump in nine-month sales to $845.2 mln; sees
operating margins improvement in Q4 on full benefit of price
increases
    ** Jefferies believes RWC's pricing realisation allows a
higher percentage of cost inflation recovery
    ** Brokerage says highly fragmented global plumbing industry
provides acquisition opportunities
    ** Brokerage, however, cuts earnings view on additional U.S.
dollar debt, higher working capital requirements, and interest
costs hikes
    ** Cuts adjusted net profit view by 6.5% each for FY22 and
FY23 to $157 mln and $171 mln, respectively
    ** Eight of 12 analysts rate the stock "buy" or higher,
three "hold" and one "strong sell" or lower; their median PT is
A$5.30 – Refinitiv data

 (Reporting by Sameer Manekar in Bengaluru)
 ((Sameer.Manekar@thomsonreuters.com; Twitter: https://twitter.com/sameer_manekar))