Metcash shares gain as analysts back hardware business consolidation

The news: Metcash shares rose further on Wednesday as research analysts backed the company’s announcement on Tuesday that it will consolidate trade tool supplier Total Tools and its Independent Hardware Group, and that unaudited earnings indicate it will beat expectations.

The numbers: Metcash shares were 3.9% higher at $3.64 at 11:27am AEST.

The context: Macquarie analysts have upgraded their position on Metcash stocks to ‘outperform’, after the company said FY25 earnings before interest and tax for the company’s hardware pillar are expected to come in ahead of expectations. They also said the merger “provides upside in medium-to-long term”.

UBS analysts raised their target price for Metcash shares from $3.50 to $4 based on higher earnings. They also described the hardware consolidation as “prudent” amid challenging market conditions but said the departure of “Total Tools CEO Richard Murray is a loss”.

Meanwhile, analysts at investment and advisory group Jarden slightly lowered their share valuation from $4.10 to $4, "reflecting softer hardware and liquor earnings” amid key risks like price competition, market share loss and a housing slowdown.