First half margins in food declined, despite some improvement in sales. This suggests to Deutsche Bank that cost reductions are no longer sufficient to offset cost inflation.
Structural challenges continue and the broker does not expect sales to improve to a level where operating leverage can be avoided.
Hardware did well but sales are also expected to decline in this segment once the current construction pipeline ends.
The broker predicts a very tough FY20. Sell rating maintained. Target is $2.40.
Sector: Food & Staples Retailing.
Target price is $2.40.Current Price is $2.46. Difference: ($0.06) – (brackets indicate current price is over target). If MTS meets the Deutsche Bank target it will return approximately -3% (excluding dividends, fees and charges – negative figures indicate an expected loss).