Harvey Norman shares slide as UBS downgrades stock
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The news: Shares in Harvey Norman lowered on the ASX after UBS downgraded its rating on the white goods retailer from 'buy' to 'neutral'.
The numbers: Harvey Norman shares were down 1.2% to $4.84 by 1pm AEDT, having advanced around 30% over the last 12 months.
Shares closed 2.3% higher on Wednesday after the company reported a 1.7% rise in sales for the four months to October.
UBS kept its $5 price target but revised down its earnings forecasts by 0.8% in FY25 and 0.9% in FY26 due to lower expected earnings in Asia, New Zealand, and Croatia and Slovenia.
The context: UBS analysts said that while Harvey Norman's profit-before-tax margin had stabilised, the prospect of significant margin expansion has reduced due to a subdued revenue outlook.
They noted that while the company's share price has outperformed the market this calendar year — rising 16.7% compared to 10.7% across the ASX 200 — the subdued outlook combined with the absence of a valuation upside has driven UBS' downgrade.
The source: UBS research
