Graincorp Ltd (ASX: GNC) shares are having a barnstorming finish to the week.
At the time of writing, the ASX 200 share is up 6% to $8.00.
Why is this ASX 200 share storming higher?
Investors have been bidding Graincorp shares higher today after brokers responded positively to its half-year results.
As a reminder, yesterday Graincorp revealed that its earnings fell in FY 2023. It reported a 34% decline in net profit after tax to $250 million. This was due to weakness in the key Agribusiness segment.
While this may not look great on paper, it was in line with the market's expectations.
As I mentioned at the top, this went down well with brokers. For example, Macquarie has retained its outperform rating with a $9.70 price target, UBS has held firm with its buy rating with a $9.00 price target, and Bell Potter has reiterated its buy rating with a $9.55 price target.
This implies a potential upside of 21%, 12.5%, and 19.5%, respectively.
Bell Potter believes the company's shares are good value at current levels. It highlights that the ASX 200 share is trading on cyclical low multiples, making its valuation "undemanding." The broker commented:
Our Buy rating is unchanged. When we consider the uplift in baseline PBTDA and improved corporate net cash position GNC is already trading at levels consistent with the previous cyclical low. Trading at 5.4-6.1x through the cycle PBTDA, valuation is undemanding, and we would expect a further step change in through-the-cycle EBITDA if oilseed crush capacity additions are pursued.
In addition, its analysts are expecting a 22 cents per share dividend from Graincorp in FY 2024. This equates to a 2.75% fully franked yield.