On Wednesday, RBC Capital initiated coverage on Inghams Group Ltd. (ING:AU) stock with a Sector Perform rating and a price target of AUD3.00. Inghams, recognized as one of the leading poultry producers in Australia and New Zealand, commands over 30% of the market share. The company's extensive network and long-term contracts across various channels contribute to its strong market position.
The analyst from RBC Capital highlighted Inghams' significant scale benefits and a broad facility network, which, along with ongoing efficiency initiatives, offer the company several ways to manage its cost base effectively. These factors are seen as positive for Inghams' ability to maintain profitability.
Furthermore, the supportive trends in poultry consumption are anticipated to bolster core volumes in the long term. The company's valuation is deemed attractive, trading at approximately 10 times the consensus FY25 earnings per share (EPS) and near its 52-week low price levels.
Despite these positives, RBC Capital has expressed caution due to the uncertainty surrounding the near-term volume outlook for Inghams. This uncertainty has led the firm to adopt a neutral stance on the stock at the present time. The price target set by RBC Capital reflects this cautious optimism, pegging the stock's potential at AUD3.00 per share.
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