GrainCorp shares gain as analysts see optimistic outlook
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The news: GrainCorp was one of the ASX 200's top performers on Friday as Macquarie, Bell Potter and UBS analysts lifted their target price on the agriculture group.
The numbers: Macquarie analysts hiked their target price on the stock from $9.02 to $9.24, while Bell Potter analysts upgraded from $9.20 to $9.50. UBS analysts increased their target price from $9.10 to $9.20.
GrainCorp shares surged on Thursday after the agribusiness kept its dividend unchanged at 24 cents a share, including a 10 cents special dividend, despite a sharp fall in half-year profit.
Shares continued to gain on Friday, trading 3.9% higher at $8.45 by 1:30pm AEST.
The context: Macquarie analysts said FY24 has been a year of normalising earnings with falling grain volumes across east coast Australia (ECA), as well as depressed margins amid lower grain velocity in supply chains, with growers retaining more grain than normal.
However, they said they are "cautiously optimistic" of velocity increases into FY25 as global grain prices move higher, with ongoing improvement in seasonal conditions across ECA. The analysts retained their 'outperform' rating on the stock.
Bell Potter analysts maintained their 'buy' rating on GrainCorp, noting that underlying NPAT for the first half was ahead of their expectations. The analysts hiked their NPAT estimates by 4% in FY24, 10% in FY25 and 17% in FY26.
UBS analysts retained their 'buy' rating and said a potential return of La Nina later this year could support an above-average FY25 east coast crop.
The sources: Macquarie research, Bell Potter research, UBS research
