Daily ShareChat: Pumpkin Patch

By Jenny Ruth

The key positive catalyst for Pumpkin Patch would be "a genuine macro tailwind" in Australia, says First NZ Capital analyst Sarndra Urlich.

Its results in the year ending July 2010 "hinges around Australia with that market still subdued but presenting some margin upside," Urlich says.

But a key negative catalyst would be no change from the dire performances in Britain and the US. "The US remains an unknown quantity, although obviously the losses will be significantly less this year, and the UK is a basket case," she says.

Although the company is sticking with its estimate of $3 million in operating losses in the US in 2010, "this is still very much up in the air. Pumpkin Patch is expected to update the market on estimated losses at its November AGM."

Urlich is forecasting Pumpkin Patch will lift normalised net profit from $14.7 million in 2009 to $23.9 million in 2010 and to $25.1 million in 2011.

She has raised her valuation to between $1.74 and $2.20 a share with a midpoint of $1.97 compared her previous $1.82 valuation. "Our valuation is mostly premised on a slightly less bearish view on the earnings outlook for Australia and wholesale," she says.

BROKER CALL:  First NZ Capital rate Pumpkin Patch as underperform.

Daily ShareChat articles report how the main experts in the market might view a certain share and we provide this commentary as a useful resource for investors. Content on this site does not in any way constitute a recommendation to buy, hold or sell any particular share. Investors should always seek professional advice before making any investment decisions.

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Daily ShareChat: Pumpkin Patch
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