G8 Education's operating income for the 11 months to November was $98m (including the -$12m provision taken for the remediation of employee underpayments).

The outlook for FY21 includes normalisation of occupancy, which is -4.5% below pcp currently, and circa -$50m of capex. Morgan Stanley is pleased occupancy has rebounded faster than expected.

On the flip side, certainty around occupancy rebound is still lacking and closure of underperforming centres and cost inflation continues with oversupply still a risk.

Lacking conviction on the earnings trajectory, Morgan Stanley reaffirms its Equal-weight rating. Target is $1. Industry view: In-line.

Sector: Consumer Services.

Target price is $1.00.Current Price is $1.23. Difference: ($0.23) - (brackets indicate current price is over target). If GEM meets the Morgan Stanley target it will return approximately -23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2020 Acquisdata Pty Ltd., source FN Arena