Mainfreight share price could crack $100 within a few years, analysts say

Tuesday, 9 February 2021

Mainfreight has had an “impressive record” through Covid-19, according to a Forsyth Barr report.

Mainfreight’s share price could crack $100 within a few years as the transport company consistently posts higher profits, brokerage Forsyth Barr says.

Mainfreight’s share price has risen 71 per cent over the past year and was trading at $67.92 in mid-afternoon trading on Tuesday.

“A share price of $100 may have been considered challenging several years ago, but now it's within the realms of possibilities,” Forsyth Barr analysts Andy Bowley and Scott Anderson said in a report titled 100 Year Company En Route to NZ$100.

“Mainfreight is a high-quality growth story with an enviable track record and a significant opportunity to expand its presence further in global freight and logistics markets given its proven competitive advantage,” the analysts said.

* Despite global uncertainty, NZ should have a positive economic outlook for 2021

* NZX closes higher for third consecutive day, after strong run by Mainfreight

Mainfreight managing director Don Braid has said the company expects profit this year will be much improved on last year’.

Its attractive features have not been missed by the market, as the company has enjoyed strong share price performance over an extended period of time, they said.

Still, they didn’t view the stock as expensive, raising their target price for the shares to $70 from $62.

“Whilst we recognise it's not cheap, we retain an ‘outperform’ rating in light of its growth potential, track record, and high quality attributes,” they said.

“Its competitive advantage allows for accelerated market share wins during periods of extreme market uncertainty as was the case during 2020.”

Assuming its profits continued to grow at the same rate, and that was reflected in the share price, then $100 a share was possible within the next three to four years, the analysts said.

They noted Mainfreight’s focus on “everyday freight” meant the company’s profits were less volatile than its larger peers and this had resulted in an “impressive record” through Covid-19.

“Almost all of its peers were negatively impacted by Government restrictions, yet Mainfreight, helped by geographic diversification, maintained its earnings growth momentum.”

In the midst of the pandemic, Mainfreight was increasing its market share, boosting profits and dividends, and continuing to invest for future growth.

The company reported a 23 per cent increase in after-tax profit to $72.9 million for the six months to September 30 and lifted its dividend payment by 20 per cent to 30 cents a share.

Mainfreight managing director Don Braid has said the company expects profit in the year to March 31 would be much improved on last year’s $159.2m.