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Investing.com - UBS has upgraded Temple & Webster Group Ltd (ASX:TPW) from Sell to Neutral while lowering its price target to AUD14.80 from AUD17.70.
The upgrade follows what UBS describes as a "significant share price sell off" that has brought market expectations to "more realistic levels."
UBS analyst Evan Karatzas explained that the previous Sell rating was based on "overly optimistic market expectations" that Temple & Webster could maintain revenue growth rates exceeding 20% annually while simultaneously expanding EBITDA margins by approximately 100 basis points per year.
From a valuation perspective, UBS notes that Temple & Webster now trades at a one-year forward EV/Sales multiple of 2.4x, which aligns with its long-term average.
This current valuation represents a substantial decrease from the company’s recent trading level of over 4x EV/Sales, which UBS cites as further justification for its revised Neutral recommendation.
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