Goodman Fielder (GFF) Share Trading Recommendation

Submitted by Craig Strzelecki on 13 February, 2007 - 18:21

Goodman Fielder (GFF) have a maintained Buy 1 share trading recommendation and a raised price target of $2.65 from analyst UBS. The analyst notes that the AC Nielsen grocery update to 31 Dec 06 shows a deceleration in GFF's MAT bread value growth to 5.5% from 7.5% at 01 Oct 06. However the Sept quarter benefited from price increases that have been repeated in Jan 07. The 5.5% trend compares favourably to GFF's prospectus forecast of 3.4% Australian baking sales growth in FY 07. Homebrand in baking does not appear to be a big threat with market share down 260bp from two years ago. GFF is increasing share in the margarine, salad dressing & oils categories. GFF will report H1 07 results on 27 Feb. The analyst looks for FY 07 prospectus NPAT of $224m to be reiterated. A further catalyst for the stock will be the appointment of a new CFO - we believe GFF's increasing profile will ensure a strong candidate is found. Meanwhile potential acquisition opportunities including Australian dairy look exciting. Their DCF-based price target is raised to $2.65 from $2.43 reflecting a predicted beta of 0.75 (previous 1.0) now that GFF has established a trading track record. At $2.65 GFF would still be at a 19% FY 07E PE discount to market with a 4.8% dividend yield.

Goodman Fielder Limited is listed on the Australian Stock Exchange (ASX) under stock code GFF. You can view their investor website here. Find out the meaning of the recommendations in this primer. GFF was listed on the 19 December, 2005. Max Ould is the director of Goodman Fielder and Peter Margin is the CEO. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade GFF. The Company's business is the manufacture and supply of various consumer food products, including baking, spreads & oils, edible fats and dairy goods. Check your charts and good luck with your share trading!

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