While acknowledging the near-term uncertainty for domestic retailers relating to mobility restrictions, UBS believes investors should consider the earnings potential in a post-pandemic environment and Adairs presents an attractive entry opportunity.
The broker considers Adairs a quality retailer with a loyal customer base, flexible lease profile and a track record of pre-pandemic organic growth. FY23 net profit is forecast at $72m, above pre-pandemic levels. Buy rating retained. Target rises to $5.40 from $4.40.
Target price is $5.40.Current Price is $3.69. Difference: $1.71 – (brackets indicate current price is over target). If ADH meets the UBS target it will return approximately 32% (excluding dividends, fees and charges – negative figures indicate an expected loss).