An earnings decline in the FY20 result was amplified by the high fixed-cost nature of InvoCare's business (mainly employees). This drove the earnings (EBITDA) margin down -740 basis points to 21.5%, explains Morgans.

A lower number of deaths and a decline in average revenue per funeral meant the result was lower than Morgans had expected though in-line with recent guidance.

More positively, data on Australian funeral volumes suggests the business at least maintained market share during the year and the balance sheet remains healthy. Add rating and target falls to $12.60 from $13.

Sector: Consumer Services.

Target price is $12.60.Current Price is $11.20. Difference: $1.40 - (brackets indicate current price is over target). If IVC meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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