FY16 results were ahead of estimates across both local and international business. Deutsche Bank observes there are some signs the housing market is peaking but Harvey Norman is a very late cycle play and the housing tailwind is being complemented by favourable conditions in consumer electronics.
Hence, the broker envisages considerable earnings upside and sales momentum. Buy rating retained. Target is raised to $6.00 from $5.10.
Target price is $6.00.Current Price is $5.38. Difference: $0.62 – (brackets indicate current price is over target). If HVN meets the Deutsche Bank target it will return approximately 10% (excluding dividends, fees and charges – negative figures indicate an expected loss).