German competitor Kaufland is looking to start a battle for its share of the Australian households’ wallet and Citi thinks this will act as a catalyst for a resumption of an industry-wide private label price war.
The analysts have, in anticipation, lowered long term margin assumptions for the incumbents Woolworths and Coles.This leads to lowered forecasts, and a lower valuation.
The price target for Woolworths falls to $28.75, the recommendation is downgraded to Sell from Neutral.
Sector: Food & Staples Retailing.
Target price is $28.75.Current Price is $33.17. Difference: ($4.42) – (brackets indicate current price is over target). If WOW meets the Citi target it will return approximately -15% (excluding dividends, fees and charges – negative figures indicate an expected loss).