ABC Learning Centres: Join The $9 Club

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By Rudi Filapek-Vandyck

Integrating Hutchison’s Child Care Services (HCC) into their model for ABC Learning Centres (ABS) has only made analysts Nick Rehak and Rohan Sundram at Austock Securities even more bullish towards Australia’s largest operator of childcare centres.

The result is that ABC’s EPS growth of an estimated 23% is expected to be beaten by at least 2% in FY07.

Macquarie analysts cautioned recently, as did Citigroup, that the market seems to be eager to look at the upside only for the years ahead, but Austock displays no such concerns.

The broker has a $9 target for the stock, which makes it a member of the now officially declared $9 Club. Other members include UBS (target $9.10) and ABN Amro (target $9.66).

Including a prospective 2%+ dividend yield, that would imply share holders can expect circa 36% in total return over the next twelve months. On the basis of Austock’s target, not on ABN Amro’s.

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