Business

Buy recommendation for Z Energy

13:52 pm on 28 October 2014

An analyst is recommending investors buy shares in Z Energy, even though he expects the company to miss its prospectus forecast for the six months ended September.

Grant Swanepoel at Craigs Investment Partners is expecting the petrol retailer to report operating profits of $93 million for the six months, a shortfall from the $105 million prospectus forecast.

Mr Swanepoel says he has also raised his forecast of the industry's long-term profit margins because of consistent growth in margins over the past three years.

Previously, he had a long-term margin expectation of 26 percent of the landed petrol price and has now raised that to 28.5 percent.

Z Energy shares rose 4 cents to $4.14 this morning compared with Mr Swanepoel's $4.64, 12 month price target.