Woolworths (WOW) Share Trading Update

Submitted by Craig Strzelecki on 1 March, 2007 - 02:47

Woolworths (WOW) has a Buy 1 share trading recommendation and a price target of $30.30 per share from analyst UBS. Analyst has observed the progress of Woolworths past the competition. 1H07 NPAT came in 3% above their estimate & consensus. The quality was very high with several one-off costs booked above the line. Australian Food & Liquor EBIT was 11% above their forecast, partially offset by weaker than forecast NZ Supermarkets, Big W and Consumer Electronics (post India costs). Guidance was lifted 4% to 20-24% NPAT growth. The analyst still sees upside to this given the momentum in F&L. They have upgraded Australian F&L margins again. They are now forecasting 6.0% margins in 2H07 (previously FY10) rising to 7.5% by 2012. They see further upside to short term earnings and cash flow as WOW moves into the harvesting phase post its project refresh capex program.The analyst DCF has risen to $32.39 driven by the increase in our free cash flow forecasts. Our price target is derived by applying the cost of equity less dividends to our valuation. The free cash flow yield is rising sharply as working capital and capex fall which justifies the high PE in our view. WOW remains one of our top picks in the sector along with HVN, BBG and MTS.

Woolworths Limited is listed on the Australian Stock Exchange (ASX) under stock code WOW. You can view their investor website here. WOW was listed on the ASX on 12 July, 1993。 Michael Gerard Luscombe is the CEO and James A Strong the Chairman fir Woolworths. The company offers Food, general merchandise and specialty retailing through chain store operations. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade WOW. Check your charts and good luck with your share trading!

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