Jefferies, Morningstar back hardware growth for Australia's Metcash, remain cautious on food recovery
BUZZ-Jefferies, Morningstar back hardware growth for Australia's Metcash, remain cautious on food recovery ** Jefferies and Morningstar remain upbeat on Metcash's MTS.AX tools and hardware business, with profits expected to improve despite worries of weak construction activity
** Conglomerate said on Wednesday its total group sales excluding tobacco rose 2.8% in first 18 weeks of FY27
** Co also flagged cost inflation pressures to remain elevated, with plans in place to reduce impact in food and liquor divisions in 2H27
** Jefferies trims price target to A$3.40 from A$3.50, retains "buy" call
** Brokerage says Food is "rarely smooth sailing" for co, but expects continued sales improvement for the segment
** However, Jefferies cuts group NPAT estimate by 5% for fiscal 2027 due to the Food drag
** Morningstar says that while current trading conditions are challenging, profits in hardware and liquor are expected to improve as their respective markets recover cyclically
** Investment research firm maintains its fair value estimate at A$3.8
** Metcash down 13% YTD, as of last close
(Reporting by Subhalakshmi Dey in Bengaluru)
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