Shares in Bega Cheese Ltd (ASX: BGA) are down 1.5% to $6.65 today, having shed about 9% of their value since the half-year results released on Wednesday, despite an improvement in all key financial metrics over the previous corresponding period.
However, the market might have been too harsh on the dairy company according to UBS. Bega's first-half normalised EBITDA of $70 million exceeded the $64 million forecast by the broker. Analysts at UBS now valuate Bega at $7.22 a share and find the stock attractive at the current price. UBS upgraded Bega's rating from neutral to buy, although the target price was readjusted from $8.30 to $7.90.
The broker's forecast for Bega's EBITDA over the full year is $114 million, on the high end of the company's guidance of between $105 million and $115 million. Based on UBS's forecast, shares in Bega Cheese currently trade at 20x earnings.
