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Foster Stockbroking initiates coverage of Adacel, points to 18% price upside

Published 03-FEB-2017 12:46 P.M.


1 minute read

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Foster Stockbroking has initiated coverage of Adacel Technologies Limited (ASX: ADA) with a buy recommendation and a 12-month price target of $2.79, a premium of 18% to Thursday’s closing price of $2.37.

Adacel is a major global provider of air-traffic management and control training simulation systems.

The company boasts a blue-chip client base in a niche market with 341 simulators across 38 countries.

Its clients include major airlines as well as defence organisations such as the US Air Force and the US Army. The company’s largest customer in fiscal 2016 was Lockheed Martin.

Foster Stockbroking expects increasing sales and earnings, a broadening of its customer base and retention, and enhancement of existing contracts to all act as significant share price catalysts over the coming year.

The broker is forecasting net profit to increase from $7.6 million in fiscal 2016 to $8.2 million in fiscal 2017.

However, Bell Potter is more bullish with its expectations. The broker is forecasting a net profit of $10.8 million in fiscal 2017, and it has a share price target of $3.50 on the stock.

When Bell Potter ran the ruler across the stock last November it projected strong double-digit earnings per share growth over the next three years. Based on its forecasts, earnings per share growth of 17%, 18% and 13% are expected in fiscal year’s 2017, 2018 and 2019 respectively.

It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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