A: Thanks for the question.

There was a great article in the AFR last Wednesday  that explained what has been going on. Essentially, the market has started to see some risks to Invocare’s “monopoly” – price competition in Western Australia, and in the UK, the arrival of both community operated/owned providers and a “immediate cremation” model. With the latter, the body is cremated immediately after death, and the relatives then have a planned memorial service/wake which doesn’t necessarily involve the funeral home. In other words, the standard model could potentially be disrupted.

According to FN Arena, it is still trading above the consensus broker target price of $14.46 (last price $15.18). Multiples aren’t cheap – a forecast 25.6 times FY17 and FY18 earnings.

My sense is that Invocare is pretty fully priced, and will struggle to go much higher in the absence of a positive earnings surprise.

regards