Jefferies views food margins for Metcash sustainable but flags operational risks

Metcash

10/12/2024 23:17

** Jefferies recommends "hold" on Aussie retailer Metcash
 MTS.AX  
    ** Sees EBIT margins declining since FY22/FY23 due to
disinflation, cost inflation and theft, but continues to remain
at healthy levels
    ** Brokerage sees moderating food inflation a near-term
challenge to co
    ** Hardware business impacted due to operating deleverage
resulting from weak building activity — Jefferies
    ** Brokerage sees solid margins, return on capital employed
(ROCE) and low debt as positives
    ** Maintains PT of A$3.40, compared to last closing price of
A$3.31
    ** 7 of 12 analysts rate the stock "buy" or higher, 4 "hold"
and 1 "sell"; their median PT is A$3.70 — LSEG
    

 (Reporting by Nichiket Sunil in Bengaluru)
 ((Nichiket.Sunil@thomsonreuters.com))