Endeavour Group shares slide on Morgan Stanley downgrade
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The news: Endeavour Group shares were down after Morgan Stanley downgraded the Dan Murphy’s and BWS operator due to continued softness in the Australian retail market.
The numbers: Endeavour shares fell 1.8% to $4.06 at 12:15pm AEST, having retreated by around 23% over the last 12 months.
Morgan Stanley downgraded the stock from 'overweight' to 'equal-weight' and slashed its price target from $5.10 to $4.60.
The context: Morgan Stanley's analysts said retail market softness has created downside risk to Endeavour's profitability as earnings season approaches.
The retail liquor market remains challenged, they said, with Endeavour calling out an acceleration of promotional intensity in the fourth quarter, against a backdrop of subdued sales.
They also flagged that Endeavour may lack strategic direction until new CEO Jayne Hrdlicka starts in January.
However, the analysts noted that this downside risk is partially mitigated by stronger anticipated performance in the company's hotel segment.
The source: Morgan Stanley research
