Jefferies downgrades Australia's Harvey Norman to 'hold' on prospects of demand slowdown

Harvey Norman Holdings

05/05/2022 01:35

** Brokerage Jefferies downgrades Australian retailer Harvey
Norman  HVN.AX  to "hold" from "buy", cuts PT to A$5.30 from
A$6.10
    ** Jefferies notes that HVN has executed well, delivering
strong dividends and share price performance but expects the
demand to reduce sharply in the future
    ** Says industry data suggest sales are still strong,
however, it expects a demand slowdown following RBA's interest
rate hike likely to be the first of many, and  mounting
cost-of-living pressures  
    ** Brokerage says cost-of-living pressures might reduce
households capacity for discretionary consumption
    ** Says the timing of rate-hike impact on consumers is
difficult to predict, but expect sweakness from FY23
    ** Jefferies says its still sees long-term value in HVM,
particularly due to its hard property assets, but in the current
environment, it "can't advocate" buying a discretionary retailer
    ** Brokerage upgrades its FY22 estimates for HVN by 2.5% to
reflect continued strength in trading but reduces estimates for
FY23 onwards by about 6% in anticipation of a demand slowdown 
    ** Seven of 12 analysts rate the stock "buy" or higher, four
"hold" and one rates it "sell"; their median PT is A$5.75 -
Refinitiv data
    ** As of last close, stock down 0.6% this year

 (Reporting by Himanshi Akhand in Bengaluru)
 ((Himanshi.Akhand@thomsonreuters.com;))