Could Mainfreight become NZ's only $100 stock?

Could Mainfreight's share price reach $100. Photo / supplied

Freight and logistics company Mainfreight has been one of the strongest performers on the NZX for many years.

The stock traded yesterday at $67.94, up 64 per cent over the last 12 months, and more than double its price of two years ago.

In a research report, broker Forsyth Barr lifted its target price to $70 from $62 and questioned whether Mainfreight could soon become a $100 stock.

The brokerage said Mainfreight is a "high-quality growth story with an enviable track record".

It also had opportunity to expand its presence further in global freight and logistics markets.

Mainfreight has enjoyed a strong share price performance over an extended period of time, driven by a combination of price/earnings multiple expansion, earnings growth and earnings upgrades, the broker said.

"However, at 33 times one-year forward price earnings (PE), with Mainfreight trading ahead of its key global freight peers and now broadly on par with the domestic market, share price upside is more reliant on earnings growth, in our opinion."

Forsyth Barr has maintained an "outperform" rating on the stock.

"Almost all of its peers were negatively impacted by Government restrictions, yet Mainfreight, helped by geographic diversification maintained its earnings growth momentum," Forsyth Barr said.

At 33 times its one year forward PE, Mainfreight's multiple has more than doubled over the past four years.

But will it become a $100 company?

"A share price of $100 may have been considered challenging several years ago, but now it's within the realms of possibilities.

"Assuming historical average EPS growth (plus 12 per cent per annum) can be maintained, and Mainfreight is able to sustain its current forward PE multiple, then a share price of $100 is possible within the next three to four years, on our calculations," Forsyth Barr said.

In its last earnings filing to the NZX, Mainfreight reported a 7.2 per cent lift in revenue to $1.61 billion in the six months to September 30.

The company's net profit for the period came to $72.9 million, up 23.3 per cent on the previous corresponding period.

Mainfreight said the result reflected improvement in performance in its Australian and New Zealand operations, supported by ongoing progress in its Asian business.