Citi raises PT on Australia's Wesfarmers on improving housing market, hardware sales

BWP Trust

12/11/2020 21:43

** Citi Research increases price target for Wesfarmers Ltd
 WES.AX  to A$43/shr from A$42/shr earlier
    ** Brokerage says diversified retailer Wesfarmers continues
to benefit from strong consumer spending, particularly on DIY
hardware and work from home products
    ** Citi upgrades EPS view by ~5% in FY21 and ~1% in FY22 to
reflect better operating leverage to near-term sales demand and
the improving housing outlook over the next 12 months
    ** Says improving housing outlook is resulting in a more
gradual return to normalised sales at Bunnings, its hardware
division, and earnings post-COVID-19
    ** Citi notes that while there were some stock shortages in
July and Aug in WES' discount clothing retail stores, stock
levels have picked up in Sept and Oct and they are better placed
for the key Nov and Dec sale events
    ** Brokerage, however, maintains "Sell" rating on grounds
WES is trading on 26 times FY23 price-to-earnings ratio after
earnings upgrades, a premium to retail peers
    ** Stock up 18.3% this year, as of last close, outperforming
the benchmark ASX200 index's  .AXJO  4% decline

 (Reporting by Rashmi Ashok in Bengaluru
Editing by Sonya Hepinstall)
 ((Rashmi.Ashok@thomsonreuters.com; +918061822604;))