Tag: ASX:TAH

Tabcorp has been a “high conviction” buy idea, following the recent Algo buy Signal at $4.20. The high conviction was based on the benefits of the Tatts merger showing up in the FY18 earnings results.

Yesterday, TAH reported FY18 earnings slightly ahead of consensus and importantly reaffirmed synergy guidance of “at least $130m”.

FY18 EBITDA came in at $736m & allowing for 5% growth into FY19 we now have the stock on a forward yield of 5%.

We now consider the stock full value and recommend investors lock in profit or sell covered call options.

Over the last two weeks, shares of TAH have been trading in a narrow 15 cent range between $4.60 and $4.75.

It’s likely that this indecision pattern is due to the upcoming FY 2018 earnings report scheduled for August 8th.

This will be the first report which will include the combined Tatt’s and Tabcorp earnings data.

A recent broker note suggests that the the merged entities will have at least $130 million of synergy savings and has upgraded the stock to “overweight” with a target of $5.20.

Our ALGO engine triggered a buy signal on TAH on April 5th at $4.27 and the stock is included in our ASX Top 100 portfolio.

Tabcorp

Our Algo Engine generated a recent buy signal in Tabcorp at $4.20 and we again reaffirm our “strong buy” position in the stock.

Last week, the Australian Federal Government passed legislation which will prohibit the use of ‘synthetic lotteries’ like Tabcorp’s main lottery competitor, ‘Lottoland’.

TAH effectively has a monopoly on lottery activity, as the company holds the licence in every state, with the exception of Western Australia, which is state-run.

We feel Tabcorp’s defensive earnings are being undervalued by the market and the August earnings result will be a catalyst to drive the share price higher. 

Tabcorp goes ex-div $0.125 on the 11th August.

Tabcorp

Despite the announcement that both WA and VIC will raise race field fees, the share price of TAH continues to build upside support from the $4.50 area.

Several broker notes have suggested that even though the increased fees could lower net profits by close to $5 million, the consensus price target remains in the $5.20 to $5.50 range.

Our ALGO engine triggered a buy signal on TAH at $4.22 on April 4th and the stock was included in our Top 100 Portfolio in early February.

TAH will pay a 12.5 cent dividend on August 11th and we suggest accumulating shares at these levels.

Tabcorp

We’ve been advising our readers to buy Tabcorp following the Algo Engine buy signal at $4.20. Although TAH is now trading $4.52, we continue to recommend the stock.

Our upside price target is $5.20 over the medium-term.

Tabcorp

Much of the recent reporting on TAH has been focused on the growth in wagering revenues, in general, and the potential boost during the soccer world cup, specifically.

However, a recent report has shed light on the revenue contributions from the Tatts Lotto side of the business. With pool growth expected to rise 4.1% over the remainder of 2018, we see this as a net positive for the share price.

At the current price of $4.50, TAH is trading at 15.2 X earnings and 22% below the target price of $5.50 per share.

Our ALGO engine triggered a buy signal for TAH on April 4th at $4.22 and the stock was added to our model portfolio on February 12th at $4.52.

Tabcorp

Our Algo Engine generated a buy signal in Tabcorp at $4.20 and we expect to see the share price trading in the $5.00+ range, following the August earnings result.

Shares of TAH have had their strongest week in 3 months despite mixed news about increased competition and lower overall wagering forecasts.

The share price posted a high of $4.52 yesterday but has slipped back to initial support near $4.35 in early trade today.

We still prefer the long side of TAH and are expecting run back over the $5.20 area over the medium-term.

Based on the current price, TAH is yielding 4.6% on this year’s dividends.

Tabcorp