A new retailer co-operative appears designed to reduce buying costs and improve the availability of local and specialty lines that do not compete directly with the range offered by Metcash.
If limited to such products the impact of this new cooperative on the company would be minimal, Credit Suisse assesses.
The broker finds it hard to come up with an alternative to the heavy risk weighting the market applies to the company’s food division.
The pursuit of differentiation, which the co-operative supports, reflects an evolution of the independent retail sector and this appears to move it further away from the company.
Credit Suisse maintains a Neutral rating and $2.64 target.
Sector: Food & Staples Retailing.
Target price is $2.64.Current Price is $2.65. Difference: ($0.01) – (brackets indicate current price is over target). If MTS meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges – negative figures indicate an expected loss).
