FY18 results were strong but below UBS estimates because of softer outcomes in New Zealand, Big W and liquor. While believing there is an opportunity to drive efficiencies UBS acknowledges this is not in evidence as yet.
The broker is concerned about the extent to which shoppers left Woolworths in July and August on the back of the Coles ((WES)) Little Shop promotion. UBS reduces forecast by -5-6% and downgrades to Neutral from Buy. Target is reduced to $28.30 from $30.00.
Sector: Food & Staples Retailing.
Target price is $28.30.Current Price is $29.41. Difference: ($1.11) – (brackets indicate current price is over target). If WOW meets the UBS target it will return approximately -4% (excluding dividends, fees and charges – negative figures indicate an expected loss).