Treasury Wine Estates will use a combination of equity and debt for the -US$900m acquisition of high-margin luxury wine business DAOU Vineyards.

Not only does this move align with the company's premiumisation and growth strategy, notes Morgans, but it also strengthens a key gap in the Treasury Americas portfolio. The transaction is expected to be EPS accretive from FY25, with cost synergies of US$20m by FY26.

The broker increases its FY24-26 profit forecasts by 5.8%, 16.8% and 19.1%, respectively, and raises its target to $14.15 from $13.00. Add.

Sector: Food, Beverage & Tobacco.

Target price is $14.15.Current Price is $11.46. Difference: $2.69 - (brackets indicate current price is over target). If TWE meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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