“While our earnings are largely unchanged at this point, we have reduced complications / valuations for those who are likely to struggle with a return to some sense of normality (redirecting spending); and vice versa for those who have been negatively affected by the coronavirus. It’s a call to a fundamental shift in sentiment toward COVID winners, ”Morgans analysts Josephine Little and James Parker wrote in a customer note. They have downgraded Accent Group, Baby Bunting, Beacon Lighting and Super Retail Group from Add to Commenter.
Macquarie analysts have also downgraded Domino’s Pizza and Metcash as they expect COVID-19 vaccines will soon restore normality.
“There has been a sharp contrast in performance over the course of 2020 as COVID changes consumer patterns,” Macquarie’s stock analysts wrote in a note to clients today.
Online shopping habits are likely to continue, but the 2020 trend of sharing services and travel spending for upgraded home appliances will end. The outlook for Metcash is negative as the trend of “local stores” is returning to malls.
Among the supermarkets, Macquarie’s team preferred Woolworths and lowered the Coles target price from $ 18.70 to $ 18.30 but maintained a neutral rating.
“We downgraded Wesfarmers and JB Hi-Fi’s credit rating to Neutral from Outperform. We are still seeing strong earnings growth for the rest of the year, but a return to normal will see discretionary spending return to services away from consumer durables.” Analysts write Perform better in Harvey Normal because of its regional exposure to Australia, “and they made clear that the end of ten years of drought should spur the upgrade of home appliances in the regional regions.
Meanwhile, the Domino’s Pizza rating was also downgraded to poor performance and target price was lowered from $ 84.30 to $ 72.10.
“Domino’s has been the clear winner of COVID-19 on the basis of sales. While we expect continued strong growth in sales, orders for COVID-19-led ready-to-eat pizza are likely to start normalizing.”
Domino shares fell 1.8% to $ 76.44, JB Hi-Fi stock fell 4.3% to $ 44.43, Super Retail fell 3.1% to $ 9.98, Wesfarmers fell 0.6% to $ 47.14, Metcash shares declined. 0.3 percent to $ 2.94. . Woolworths and Coles each posted increases of 0.1% and 0.3%, respectively.