Coles Group’s Q1 sales update proved better-than-expected but UBS observes price deflation remains one key characteristic. FY22 forecast has been reduced by -1%.
UBS is of the view the outlook for food retailing in Australia is deteriorating and thus the whole sector will be derated over the twelve months ahead.
This broad view forms the basis as to why both main players in the sector are now rated Sell. UBS also notes Woolworths supermarkets continue to outperform. Target $16.50.
Sector: Food & Staples Retailing.
Target price is $16.50.Current Price is $17.36. Difference: ($0.86) – (brackets indicate current price is over target). If COL meets the UBS target it will return approximately -5% (excluding dividends, fees and charges – negative figures indicate an expected loss).
