As a result of recent vaccine developments, Morgans lowers multiples (while largely leaving earnings unchanged) for those stocks likely to suffer from a return to some sense of normality (redirection of spend).
The broker continues to think Christmas will be a boomer this year and first half results will show extraordinary growth with strong operating expense leverage on buoyant top-line trading. However, it’s considered the market will likely look through this strength.
Accent Group is yet to provide a trading update post its FY20 result (due at the AGM). Morgans expects trading outside of Melbourne has remained robust, with online the major driver.
Nonetheless, as a discretionary retailer, the broker expects the stock’s ability to outperform will be limited from here.
The rating is decreased to Hold from Add. The target price is decreased to $1.67 from $1.84
Target price is $1.67.Current Price is $1.65. Difference: $0.02 – (brackets indicate current price is over target). If AX1 meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).