WOW – Morgans rates the stock as Hold

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Woolworths has declared it cannot accurately forecast the impact of the virus on its full-year result. A trading update revealed strong recent sales growth on consumer hoarding, nonetheless leading to strain on supply chains to keep up with demand. Management noted, however, mayhem seemed to be easing last weekend.

On the other hand, the closure of pubs means the Hotels business faces uncertainty, to the extent the company has postponed its planned Endeavour Group spin-off until 2021. Combining strength in supermarkets and weakness in hotels the broker reduces FY21 forecast earnings by -8%. Target falls to $34.83 from $34.18, Hold retained.

Sector: Food & Staples Retailing.

Target price is $34.83.Current Price is $36.18. Difference: ($1.35) – (brackets indicate current price is over target). If WOW meets the Morgans target it will return approximately -4% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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