The GUD Holdings Limited (ASX: GUD) share price is charging higher on Wednesday afternoon.
At the time of writing, the diversified products company’s shares are up 7% to $11.30.
Why is the GUD share price storming higher?
There have been a couple of catalysts for the strong gain by the GUD share price today.
One is the release of an update at the Citi Australia & NZ Investment Conference and the other is a broker note in response to this.
In respect to the former, the update reveals that demand for GUD’s products has remained resilient despite widespread and protracted lockdowns.
GUD advised that its existing Automotive businesses achieved modest organic revenue growth during the first quarter. This is despite the company cycling very strong growth in the prior corresponding period. Positively, its acquisitions are performing in line with expectations as well.
Elsewhere, the Davey business has reported a strong increase in revenue over the prior corresponding period. Management also advised that its action plan is well advanced.
Overall, the company’s revenue and earnings before interest and tax is tracking in line with management’s expectations with margins trending ahead of the second half of FY 2021.
Broker note
Also giving the GUD share price a lift was a broker note out of Citi this morning.
According to the note, the broker has retained its buy rating and $12.30 price target on the company’s shares.
Based on the current GUD share price, this implies potential upside of 8.8% over the next 12 months before dividends or ~14% including them.
Citi commented: “GUD’s 1Q22 update was largely positive from a topline perspective. However, we have left our earnings forecasts unchanged noting: i) we are already 3% ahead of Factset Consensus FY22 EBIT, ii) further Guidance may be provided at the AGM (29 Oct) particularly around to what extent the phasing of price rises will offset supply chain cost pressures once the FX tailwind wears off.”
The post Why the GUD (ASX:GUD) share price is storming 7% higher today appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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