Elders shares bounce back as analysts expect improved second half
Make us a preferred source
Make us a preferred source on Google
The news: Shares in Elders bounced back after a slump on Monday, as analysts cited an improving outlook for the second half of the year.
The numbers: Elders shares were up 9.1% to $8.10 in early trading on the ASX, recovering from a 24% slide in the previous session after the agribusiness said first half trading was significantly below expectations, impacted by El Niño, low farmgate prices and sustained margin pressures.
The context: Shaw and Partners retained its ‘buy’ rating on the Elders stock despite trimming its 12-month price target to $9 a share from $10 previously, to reflect lower earnings in the first half.
The analysts said while the challenging conditions were factored into their revised forecasts, the second half would be "more normal". They reduced FY24 earnings forecast by 22.5% but only trimmed FY25 and FY26 forecasts by 3.5%.
What they said: “Whilst conditions were challenging, they were largely driven by the view that an El Niño would eventuate in Australia, and this risk has now passed," the analysts said in a note.
"Hence the latest outlook in the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) March 2024 crop report was much more positive than the backward looking sentiment suggests."
The source: Shaw and Partners research
