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Investing.com - UBS has raised its price target on Coles Group Ltd. (ASX:COL) to AUD25.00 from AUD23.50 while maintaining a Buy rating on the Australian supermarket chain. The company, currently valued at over $20 billion, trades near its 52-week high with a P/E ratio of 27.9x. According to InvestingPro analysis, the stock appears to be fairly valued at current levels.
The price target increase follows Coles Group’s fiscal year 2025 results, which showed sales growth of 3.6%, underlying EBIT growth of 6.8%, and underlying NPAT growth of 3.7% compared to the previous corresponding period on a 52/52-week comparison. The company’s robust performance is reflected in its annual revenue of $29 billion and an overall "GOOD" Financial Health Score from InvestingPro.
UBS noted that Coles achieved 102% cash realization as guided, while operating capital expenditure came in slightly below guidance at AUD1.27 billion versus the AUD1.30 billion forecast. The company’s FY26 guidance of AUD1.2 billion is below UBS’s previous estimate.
For the first eight weeks of the current period, Coles reported that Supermarkets sales increased by 4.9%, while Liquor sales remained flat. UBS has adjusted its reported EPS estimates downward by 3.2% for FY26 and 1.3% for FY27 due to lower expected Liquor EBIT and higher Other costs.
UBS maintained its Buy rating on Coles, citing the company’s Supermarkets division, which benefits from an improving industry backdrop and strong execution. The firm views the risk-reward profile as attractive despite recent share price performance. InvestingPro data reveals additional insights, including the company’s seven-year dividend growth streak. Subscribers can access 6 more exclusive ProTips and comprehensive financial metrics for deeper analysis.
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