EVT Ltd (EVT: AU) has received a positive adjustment from Citi, with its stock rating being upgraded from Neutral to Buy.
The investment firm also increased the price target for EVT Ltd to AUD12.73, up from the previous target of AUD11.32. This change reflects a more optimistic outlook for the company's future financial performance.
The upgrade comes as Citi analysts recognize that EVT Ltd's current share price may not fully account for the company's true value. They note that supporters of EVT Ltd have long argued that the market undervalues both the company's property assets, valued at approximately $2.3 billion and its operational businesses.
Citi cites several reasons for the undervaluation, including a lack of clarity regarding the individual values of the company's property portfolio. Additionally, earnings volatility has been a concern, with external factors such as Hollywood strikes, varying snowfall, the COVID-19 pandemic, and the performance of film releases affecting the company's financial results.
Another point of consideration mentioned by Citi is the quality of earnings reported by EVT Ltd. The firm suggests that the company has a higher-than-average amount of non-recurring items in its financial statements compared to other businesses within Citi's coverage, which may have contributed to the market's cautious stance on the stock.
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