RBC adjusts Mainfreight shares target amid PBT margin pressure By Investing.com

On Friday, RBC Capital Markets adjusted its price target on Mainfreight Ltd (MFT:NZ) shares, a global logistics provider, lowering it to NZD77.00 from the previous NZD80.00. Despite this reduction, the firm maintained its Outperform rating on the stock.

The adjustment followed Mainfreight’s Annual General Meeting for the fiscal year 2024 and a trading update for the first quarter of the fiscal year 2025. The company reported that sales growth had resumed a positive trend during the initial 15 weeks. However, this uptick in sales did not translate into profit, as profit before tax (PBT) margins declined across all business divisions and regions.

RBC Capital’s analysis indicates that while sales growth was consistent with prior estimates, the need to revise margin expectations downwards was necessary. This reassessment resulted in a decrease of 5-7% in the firm’s PBT forecasts for Mainfreight. Consequently, this led to a 4% reduction in the 12-month price target for the company’s shares, now set at NZD77.00.

The firm’s decision to maintain an Outperform rating suggests that, despite the margin pressures, Mainfreight’s stock is still expected to perform better than the broader market. The company’s ability to sustain sales growth amidst challenging conditions appears to underlie the positive outlook from RBC Capital.

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