Cabcharge Confusion May Present Buying Opportunity

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The income statement contained in the bidder’s statement for Cabcharge’s (CAB) acquisition of Taxi-Services Co-operative has certainly caused differing reactions at Credit Suisse and Macquarie.

While Credit Suisse has been quick to react, cutting its FY06 profit forecasts by 13.6% and its target on the stock by 35c to $6.65, the analysts at Macquarie are looking for a potential buying opportunity.

The rationale behind this is that the company has yet to provide any commentary regarding this apparent downgrade of guidance and as such the analysts caution that it may simply be that the company was simply too conservative with its forecasts.

The analysts cast their minds back to the Black Cabs acquisition where a very similar thing took place, although they would be concerned that the company has let this happen again.

All evidence points to a solid 2H06 they say, which is why any pullback in the share price as a result of the confusion caused by this announcement should be treated as a buying opportunity.

Macquarie has an Outperform recommendation on the stock and a target of $7.32.

It closed on Friday at $6.24.

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