Broker's take: DBS upgrades ComfortDelGro to 'buy' on potential recovery

DBS Group Research has upgraded ComfortDelGro Corporation to "buy" with a raised target price of S$1.68 from S$1.50 previously.

As at 11.52am, ComfortDelGro shares were trading down $0.03 or 2.1 per cent to S$1.41 on an ex-dividend basis.

DBS analyst Andy Sim said in a note on Monday that the research team sees an opportunity to accumulate the stock on weakness from the transport giant's removal from the MSCI Singapore index on May 29. The stock had retreated by 6.5 per cent in the past week.

DBS is looking towards a gradual recovery for the mainboard-listed company in the second half of 2020, picking up pace in its fiscal 2021 forecast - where earnings are projected to rebound by 38 per cent.

The odds of ComfortDelGro's share price appreciating over the next six to 12 months also outweighs downside risks, Mr Sim said.

DBS had reconsidered its earlier thesis due to key events and developments such as Singapore's earlier than expected move into phase two of opening the economy; the possibility of taxi rental waivers seeing the worst; and the enhanced Jobs Support Scheme.

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