EBOS Group Limited (ASX: EBO)
EBO is a healthcare and animal care products provider, catering to the Australasian markets. The company is engaged in the marketing, wholesale and distribution of healthcare, medical and pharmaceutical products.
Recommendation Rationale – SELL at AUD 34.20
- Financial Performance: In FY23, the company’s reported revenue of AUD 12.2bn, up 14.0% YoY. Results were riven by organic growth and substantial contributions from prior year acquisitions. Underlying EBITDA stood at AUD 582mn, up 33.2% YoY. On the other hand, underlying EPS came in at 147.9 cents, depicting a rise of 14.1%.
- Outlook: The company expects earnings growth in FY24, driven by both organic growth and acquisitions. The company anticipates continuing to service the Chemist Warehouse Australia contract until the expiry date of 30 June 2024.
- Emerging Risks: The company is exposed to foreign exchange risk arising from movement in exchange rates.
EBO Daily Chart
Valuation Methodology: Price/Earnings Approach (FY June'24E) (Illustrative)
Given the company’s diversified operations, consistent financial performance, organic and inorganic growth prospects, etc, the company might trade at a slight premium to its peers. For valuation, few peers like Resmed Inc (ASX: RMD), Integral Diagnostics Ltd (ASX: IDX), Ansell Ltd (ASX: ANN), and others have been considered. Considering the current trading levels and risks associated, downside indicated by the valuation, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 34.20, as of November 3, 2023, at 10:15 AM AEDT.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Note 1: Past performance is neither an indicator nor a guarantee of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 3, 2023. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
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