Woolworths Group’s March-quarter sales proved a mixed bag, sales missing consensus and UBS’ forecasts, Australian food like-for-like sales outpacing, and NZ food also proving a miss due to covid disruption (and its earnings are forecast to fall in the second half).
Challenges remain, supplier cost inflation expected to drive more price increases, and the company plans to hold gross margins flat, says UBS
But it’s steady as she goes, the broker spying solid trading momentum heading into the June quarter in Australian Food and Big W, thanks to a strong Easter. EPS forecasts rise 3% in FY22 and 3% in FY23.
UBS remains cautious given forecast low population growth and prefer’s Coles’ ((COL)) exposure to the covid reopening.
Sell rating retained. Target price rises to $36 from $34.
Sector: Food & Staples Retailing.
Target price is $36.00.Current Price is $38.44. Difference: ($2.44) – (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).
