Jefferies sees end of downgrade cycle for United Malt Group, cuts PT

United Malt

27/04/2022 01:16

April 27 (Reuters) -    ** Jefferies trims PT on
Australia's commercial maltster United Malt Group  UMG.AX  to
A$4.85 from A$5.00, maintains "buy" rating
    ** Co says severe drought conditions in Canada have hit its
barley production, crop quality and raised costs  urn:newsml:reuters.com:*:nL3N2WO088
    ** Brokerage believes the increase in costs due to the
recent drought in Canada and elevated grain costs due to
geopolitical situation in Europe are transitory
    ** Jefferies cuts its FY22 and FY23 EPS estimates for UMG by
24% and 8%, respectively, but thinks it is likely the end of
downgrade cycle for UMG
    ** Says that while supply chain remains a risk, demand for
beer and Scotch whisky is recovering well and approaching
pre-COVID-19 levels 
    ** Brokerage adds UMG should be viewed as a stable, 
moderate growth, highly cash-generative business with good
dividend potential
    ** Six of eight analysts rate the stock "buy" or higher, two
rate it "hold"; their median PT is A$4.58 - Refinitiv data
    ** As of last close, stock has lost 8.3% this year
    
($1 = 1.4013 Australian dollars)

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