At Treasury Wine Estates' Investor Day, management offered FY26 earnings (EBITS) guidance for the first time, which indicated to Morgan Stanley 5% sequential growth in 2H26 earnings versus the 1H26 result.
Notably, consensus expectations for FY26 earnings are at the bottom of the guidance range, and FY27 earnings (EBITS) were flagged to be at least the same as FY26. This is also broadly aligned with the FY27 consensus earnings forecast of $490m.
Cost-outs of $100m p.a. are targeted by FY29, with one-off costs of -$220m to -$260m. The analyst highlights management's expectations that the cost-outs will be cash positive post divestments.
Leverage is expected to top out at 2.9x before falling to the target of under 2.0x by the end of FY28. The brand portfolio will be simplified to fewer than 30 brands over five years from 76 brands currently.
Target price slips to $4.86 from $5.10. Equal-weight rated. Industry View: Cautious. EPS estimates are lifted slightly.
Sector: Food, Beverage & Tobacco.
Target price is $4.86.Current Price is $4.66. Difference: $0.20 - (brackets indicate current price is over target). If TWE meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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