UBS found two positive surprises from the company’s strategy briefing. Fourth quarter like-for-like sales were ahead of expectations and $1bn of cumulative cost reductions by FY23 were announced.
The broker believes the new strategy of a more tailored customer approach, albeit clearly defined, will take time and is not without risk.
UBS would like to be more positive about Coles Group but envisages near-term earnings risk and execution challenges. Sell rating maintained. Target rises to $12.30 from $11.30.
Sector: Food & Staples Retailing.
Target price is $12.30.Current Price is $13.49. Difference: ($1.19) – (brackets indicate current price is over target). If COL meets the UBS target it will return approximately -10% (excluding dividends, fees and charges – negative figures indicate an expected loss).
