UBS notes Woolworths’ FY20 result was in-line driven by strong cash-flow.
The FY20 result has given confidence to the broker about FY21 operating income growth being circa 8% (ex-Hotels). Year to date sales growth in FY21 has been strong at 12%, ahead of the broker’s forecast.
The broker believes the top-line will remain strong led by online growth and at-home consumption. Woolworths will exit the pandemic stronger and with higher share, forecasts the broker.
With the earnings outlook strong near-term and long-term, UBS retains its Buy rating with the target price increasing to $43.50 from $39.10.
Sector: Food & Staples Retailing.
Target price is $43.50.Current Price is $40.38. Difference: $3.12 – (brackets indicate current price is over target). If WOW meets the UBS target it will return approximately 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).
