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Jefferies on Wednesday upgraded Metcash Ltd. (ASX:MTS) stock rating from Hold to Buy and raised its price target to AUD4.20 from AUD3.80.
The research firm cited Metcash’s improved business performance, noting the company has retained more COVID market share uplift than expected in its Food & Liquor segment, while independent supermarkets’ financial health remains strong.
Jefferies identified additional growth opportunities from Metcash’s Superior acquisition and positioned the company’s Hardware business for recovery in construction activity as housing lead indicators turn positive.
The firm’s channel checks indicate some improvement in the Tools segment, suggesting further upside potential for Metcash beyond its current 13.5x price-to-earnings ratio.
Metcash, which also trades in the U.S. as (OTC:MHTLY), operates as a wholesale distribution and marketing company supplying independent retailers in the food, liquor, and hardware sectors across Australia.
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