Brokerages see margin recovery risks for Australia's Metcash, citing weak outlook

Metcash

01/12/2025 23:45

Updates with comments from Macquarie and adds share moves

** Brokerages flag margin recovery uncertainty for Metcash MTS.AX, citing cost pressures, muted housing outlook and limited near-term catalysts

** Wholesale distributor's H1 EBIT reported on Monday missed Visible Alpha consensus estimates, as per Macquarie

** Morningstar says the market is reassessing the timing and extent of an improvement in MTS's EBIT margins, after flat revenue and increasing operating costs, like labour and rents, weighed

** Citi lowers NPAT forecasts by around 5% over fiscals 2026-2028; cuts target price to A$3.60 but retains "neutral" tag

** Adds earnings growth expectations driven by co's hardware segment are "overly optimistic", highlighting detached housing approvals are tracking flat YoY and no outlook for further rate cuts

** Macquarie trims price target by 12.5% to A$3.50 while keeping "neutral" rating

** Risks seen balanced at current  pricing with few near-term catalysts for a re-rating — Macquarie

** Shares flat in early trade; YTD up 8.4%

(Reporting by Nikita Maria Jino and Kumar Tanishk in Bengaluru)

((Nikita.Jino@thomsonreuters.com))