Morningstar upbeat on Australia's Domain Holdings despite FY23 cost warning

Domain Holdings Australia

17/08/2022 20:06

** Morningstar maintains an optimistic view of prospects at
property listing firm Domain Holdings Australia  DHG.AX 
    ** DHG on Wednesday flagged higher costs for fiscal 2023,
even as it reported a 2.5% rise in annual profit, sending its
shared down over 10%  urn:newsml:reuters.com:*:nL4N2ZT07T
    ** Morningstar strategist Gareth James notes that while DHG
halved in value in H1 amid rising interest rates, the stock has
rebounded since June as fears around inflation and rates abated
    ** "We therefore don't read too much into the market's
negative reaction to the result, which we don't believe
materially changes the long-term outlook for the firm," James
says
    ** Still, James says co's forecast of broadly stable FY23
margins was worse than the brokerage's estimate of margin
expansion
    ** Calls DHG's strategy to expand its integrated real
estate-related software products "sensible and viable"
    ** Adds that he continues to believe Domain has plenty of
runway to narrow the gap with rival REA Group  REA.AX 
    ** Four of 11 brokerages rate the stock "buy", six "hold"
and one "strong sell"; median PT is A$4.03
    ** Up to Wednesday's close, stock down 31.1% this year

 (Reporting by Shashwat Awasthi)
 ((Shashwat.Awasthi@tr.com
mailto:Shashwat.Awasthi@thomsonreuters.com))