Wagners Holding's first half results were softened (below expectations) by investments in long term growth initiatives though Morgans expects these will ultimately improve the quality of the business.

While a potential investment by management in the Earth friendly concrete (EFC) business as an important catalyst to support a rerating, Morgans considers the core construction materials and services (CMS) business will leverage off an improving SEQ construction market.

The other growth initiative, other than EFC, is composite fibre technologies (CFT), which is set for a stronger 2H, according to the broker. The Add rating is maintained while the target slips to $2.20 from $2.30.

Sector: Materials.

Target price is $2.20.Current Price is $1.42. Difference: $0.78 - (brackets indicate current price is over target). If WGN meets the Morgans target it will return approximately 35% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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