First-half net profit was ahead of UBS estimates. The pandemic has structurally benefited Metcash, the broker observes, through a “shop local” emphasis and increased at-home consumption.
Nevertheless, UBS finds the risk/reward balanced given the valuation. Scope for capital returns exists, the broker notes, given the business is net cash to the tune of $120m. Rating is downgraded to Neutral from Buy and the target is raised to $3.70 from $3.25.
Sector: Food & Staples Retailing.
Target price is $3.70.Current Price is $3.22. Difference: $0.48 – (brackets indicate current price is over target). If MTS meets the UBS target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
