Metcash reported FY24 results which showed group revenue of $18.2bn and margins at 2.7%, both in line with consensus, Morgan Stanley observes.

Notably the broker states, hardware was the key area of weakness, with like-for-like sales down -3.8%, for the trade division and total tools sales down -2.3%. 

Food and Liquor was an offset, the analyst highlights with total supermarket revenue (ex-tobacco) up 4.7% year-on-year.

Management's FY25 trading update revealed continued weakness in hardware, with group sales flat year-on-year (ex-Superior Foods). 

Morgan Stanley trims FY25 and FY26 earnings estimates by -3% due to lower hardware sales and margins.

The target price is lowered to $3.83 from $4.05 and the Equal-weight unchanged. Industry View: In-Line.

Sector: Food & Staples Retailing.

Target price is $3.83.Current Price is $3.78. Difference: $0.05 - (brackets indicate current price is over target). If MTS meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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