Morgan Stanley had been concerned that tightness in raw materials and challenges with supply chain and logistics would disrupt Reliance Worldwide's volumes, revenues and earnings. While there was some margin compression in the period generally these challenges were navigated well.

Profit was in line with revenue growth stronger than forecast. Management has implemented a price increase which should offset raw
material and other costs to return margins to those seen in FY21.

Reliance remains a solid, good quality business but with a relatively modest growth profile, the broker suggests, trading at fair value after the broker lowers its PE multiple assumption. This leads to a target cut to $5.30 from $6.00. Equal-weight retained.

Industry view: In-Line.

Sector: Capital Goods.

Target price is $5.30.Current Price is $5.13. Difference: $0.17 - (brackets indicate current price is over target). If RWC meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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