Credit Suisse considers the stock expensive relative to valuation, which drives an Underperform rating. A lack of operating leverage in the FY19 result and cost headwinds appear to be incrementally negative, and the result was marginally below forecasts.
The broker expects the Australian food division will continue to grow sales revenue at an above-market rate because of the investment in store renewal and digital platforms. Target is raised to $31.68 from $30.96.
Sector: Food & Staples Retailing.
Target price is $31.68.Current Price is $36.79. Difference: ($5.11) – (brackets indicate current price is over target). If WOW meets the Credit Suisse target it will return approximately -16% (excluding dividends, fees and charges – negative figures indicate an expected loss).
