Woolworths

Woolworths Limited (WOW) has a Buy 1 recommendation and a price target of $30.30 per share from sharemarket analyst UBS. All divisions of Woolies bar Hotels reported stronger growth rates than those of the 2Q. Food & Liquor posted 6.6% like-for-like (LFL) growth despite declining inflation. BigW was the standout with LFL up 6.0% after adjusting for benefit from earlier Easter. This compares to 1.1% last quarter. NZ grew 4.9%, Hotels 1.5% and Consumer Electronics (CE) 7.5%. WOW confirmed FY07 sales guidance of 8-12% growth.The analyst has put through minor upgrades to some of our 4Q LFL forecasts to reflect the momentum we see across the divisions. They believe WOW & MTS will continue to benefit from disruption at CGJ. Our 12.4% sales growth forecast for FY07 is above guidance. WOW confirmed their interest in CGJ's general merchandise assets. Officeworks & Target hold most appeal in our view. The analyst thinks WOW would have less interest in Kmart. They note HVN delivered higher 3Q LFL growth (10.8%) than CE despite exposure to the weaker growth furniture category. Their price target for Woolworths Limited is derived by applying the cost of equity less dividends to our valuation. The free cash flow yield is rising as working capital & capex fall. This justifies the high PE in our view. WOW remains one of the sharemarket analyst's top picks in the sector along with HVN, BBG & MTS.

Meanwhile another analyst, Citigroup Investment Research has made some observations about Woolworths Limited. Woolworths 3Q07 sales show market share gains: WOW reported 3Q07 sales of $10.6 billion, growth of 8.8%. Volume growth in Food & Liquor accelerated in the quarter. Citigroup Investment Research (CIR) expect WOW's market share gains to continue until the end of 2007 given the problems at Coles. The analyst has slightly lowered its FY07e EPS by 0.2% and increased FY08e by 0.5% to reflect the timing of store openings. Market share gains accelerate; Food & Liquor comparable store sales growth accelerated to 6.6%, despite a reduction in inflation. The analyst estimates 1pp of the growth was a result of customers defecting from Coles and Bi-Lo stores. In addition, higher sales from the Action stores and the ramp-up of recently opened Dan Murphy's stores are driving comp store growth. Big W revival: Big W reported comp store sales growth of 6.0%, up from 1.1% in 2Q07. The dramatic recovery reflects WOW's decisive action to reduce the ranging in poor performing hard good categories and increase the focus on grocery items. Hotels gaming revenue declines to continue: Comparable gaming revenue is falling given QLD smoking bans introduced in mid-2006. Further bans will come into force in NSW and Victoria in mid-2007 and the analyst expects further deterioration in gaming revenue. Coles interest confirmed: Woolworths Limited confirmed it has lodged an expression of interest for Coles' general merchandise assets. The company is in a strong position given the PE premium for its shares and strong balance sheet. While Officeworks is a strong strategic fit, there is greater risk if WOW acquires Target, given fashion risk.

Shares analyst UBS have a look at which shares Outperform when the Australian dollar rises. The analyst: The obvious way to measure a share's currency sensitivity is to look at its EPS sensitivity. However, the shares analyst note that this ignores what else is going on when the Australian dollar (A$) is rising.

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 (WOW) has a new share price target of $23.10 (was $22.60) from analyst Citigroup Investment Research (CIR). Woolworths reported impressive 2Q07 sales growth of 11.5%. The strength in underlying growth should drive higher EBIT margins. CIR now forecast 26% NPAT growth for FY07e and expect WOW to increase its existing 16%-21% NPAT growth guidance range. CIR have increased our FY07e EPS by 1.9% and FY08e by 1.7 The Australian Food & Liquor division reported comparable store sales growth of 6.4%, an acceleration from 1Q07 growth of 4.9%. The company took approximately one percentage point of market share. Given strength in underlying volumes, we estimate the leverage impact for F&L Australia’s margins is 30bp. Unit cost growth is close to 3% and marketing and depreciation costs are fixed. The strong sales growth also lifts staff productivity. The company indicated supermarket inflation remained at 4% in 2Q07. However, since the end of the quarter, inflation has fallen with lower fresh produce prices. CIR expect lower inflation in 2007 in many categories as cost pressures from higher oil prices and the drought abate. Woolworths has lost market share in NZ because rival Foodstuffs has opened a large number of stores. WOW is addressing the current price gap, but Foodstuffs continues to retaliate with aggressive promotional activity.

Woolworths (WOW) have had their stock recommendation upgraded to Buy 1 with a share price target of $24 from stock analyst, UBS. Their price target is derived by applying the cost of equity less dividends to their valuation. Woolworths is UBS' top pick of the Food retailers followed by MTS. The upgraded rating is based on their view that industry conditions are working in the favour for WOW - "industry dynamics in food & liquor retailing are ideal for WOW currently.

Woolworths (WOW) has a Neutral 1 stock recommendation and a share price target of $23.06 by stock analyst and investment banker UBS. UBS also values Woolworths at $21.51 using their DCF and SOP average. They view the retailer as performing well and they "remain comfortable with our FY07 NPAT forecast being at the top end of the 16-21% growth guidance range". However, UBS' top picks in the retail sector are MTS, BBG, JBH and WOW respectively.