EU and US could reach trade deal this weekend - Reuters
On Thursday, JPMorgan analysts downgraded Woolworths Group Limited (WOW:AU) (OTC: WLWHY (OTC:WLWHY)) stock from Neutral to Underweight and adjusted the price target to AUD29.00 from AUD31.30. The downgrade followed Woolworths’ first-half 2025 financial results, which did not meet JPMorgan’s expectations, with a 2.5% miss at EBIT and a 6.7% shortfall at NPAT. According to InvestingPro data, despite recent challenges, the company maintains a GOOD Financial Health Score of 2.62, with a beta of 0.64 indicating relatively low price volatility.
Woolworths’ conservative guidance for the second half of 2025, along with a $400 million cost reduction program, contributed to the analysts’ reassessment. Additionally, a seven-week trading update indicated weaker performance than anticipated, based on the already low baseline set in 2024. The analysts believe these factors underscore the necessity for Woolworths to invest further into the business. InvestingPro analysis shows the company has maintained steady revenue growth of 5.9% over the last twelve months, while maintaining its 27-year streak of consecutive dividend payments.
The lack of a significant consensus reset during the first financial report under new CEO Amanda Bardwell was seen as a missed opportunity by the analysts. They had expected a more substantial revision of the FY26 forecasts to pave the way for strategic reinvestment aimed at revitalizing sales and earnings growth from a recalibrated starting point.
JPMorgan’s revised earnings per share (EPS) forecasts for Woolworths indicate downgrades of 5.8% in FY25, 3.7% in FY26, and 4.5% in FY27. These adjustments have led to the new price target of AUD29.00, which is based on a 22.0x FY26E price-to-earnings ratio on the firm’s EPS projections. The analysts’ commentary reflects their position that Woolworths’ current strategy may not be sufficient to drive the desired financial outcomes in the near term. InvestingPro data reveals the stock currently trades at a P/E ratio of 20.7x, with additional metrics and insights available to subscribers, including the company’s Fair Value assessment and detailed financial health analysis.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.