In the wake of a first half trading update from Universal Store Holdings, Morgans makes 12-20% EPS upgrades across the forecast years and raises the price target to $6.93 from $6.05.
The broker highlights gross margins have improved year-on-year, while the earnings uplift (EBIT growth of 49.7%) reflects both gross margin expansion and material operating expense leverage.
The analyst considers this a big period of growth for the group, reflecting strong trading out of peak disruptions caused by covid-19 and despite continued impacts from Victoria over the half.
The Add rating is unchanged.
Target price is $6.93.Current Price is $5.89. Difference: $1.04 – (brackets indicate current price is over target). If UNI meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).