Coles (CML) Stock Recommendation

Coles (CML) have retained their Outperform stock recommendation and a 12 month share price target of $15.20 from stock analyst, Macquarie Research Equities (MRE). MRE have noted that "Even if management does hit its earnings targets through costdowns alone (reducing staff by c2,500 will generate sufficient earnings leverage), without top line growth the stock will be de-rated as the market will expect the FY08 earnings base to be unsustainable." "Today's weak market has exacerbated the negative sentiment stemming from yesterday’s Coles (CML) first quarter sales announcement, as shares in CML extend their losses from yesterday. CML reported 1Q07 sales of $8.4bn - excluding discontinued businesses and Coles Express (fuel), sales increased by 5.1%. But CML's 1Q07 group comp sales growth from continuing businesses was 0.4%. Macquarie Research Equities (MRE) said this is weak growth and is likely to fuel debate as to how Coles can meet its stated FY07 Net Profit After Tax (NPAT) target of $787m. But the CML story is a cost-driven one, so this makes sales growth less important. Outperform retained."

Coles Myer Group Limited is listed on the Australian Stock Exchange (ASX) under stock code CML. You can view their investor website here. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. Check your charts and good luck with your share trading!