Goldman Sachs upgrades Ampol to 'buy' despite lower FY earnings
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The news: Goldman Sachs has upgraded its rating on Ampol from 'neutral' to 'buy', flagging the fuel retailer's "attractive valuation", despite a weaker-than-expected Q4 result.
The numbers: Goldman Sachs analysts said that despite anticipating a disappointing fourth-quarter result, Ampol shares are now trading at an 8% discount to their sum-of-the-parts valuation.
The analysts forecast a 20% earnings-per-share recovery over the next year as uptime improves at Ampol's Lytton refinery in Brisbane, with additional support lent by the federal government's refining subsidy.
Earnings will also be boosted by the company's $50 million cost-cutting program, they said.
The context: Ampol shares closed 0.8% lower at $29.69 on Thursday, after the company said it expected weaker full-year earnings due to a 56% slump in December-quarter margins at Lytton.
Goldman Sachs trimmed its price target by 1%, from $32.30 to $32, following the announcement.
The source: Goldman Sachs research
