Transurban Group's first-quarter data reveals continued weak traffic (as expected given lockdowns and former management guidance).
Morgans downgrades FY21 earnings -1% given a traffic recovery is unlikely to outpace higher corporate costs (related to SaaS accounting).
Issuance for the WestConnex acquisition and budget overruns for the West Gate Tunnel Project costs may also weigh.
FY22 earnings -7% and FY23-24 earnings -1% to -2%. Dividend is downgraded 12% to 34c per share.
Target price eases -3c to $14.79 from $14.82.
Add rating retained to reflect a potential total shareholder return of 10% including a 2.5% cash yield, with quarterly CPI increases a potential catalyst.
Target price is $14.82.Current Price is $13.75. Difference: $1.07 - (brackets indicate current price is over target). If TCL meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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