Morgans upgrades Adairs to 'buy' after 20.5% selloff
Make us a preferred source
Make us a preferred source on Google
The news: Morgans has upgraded its rating on Adairs to 'buy' after shares in the homeware and furniture retailer plunged 20.5% on Monday.
The numbers: Morgans upgraded Adairs to 'buy' from 'accumulate' but lowered its price target from $2.85 to $2.60.
Adairs slumped to $2.05 per share on Monday after flagging that full-year earnings would be around 10% below last year's result.
The context: Morgans analyst Emily Porter said Adairs is "highly leveraged" into a recovery in consumer sentiment.
The business has become more cost efficient and its transition to a new national distribution centre appears to be back on track to deliver its targeted cost savings, she said.
Porter noted that the stock has an undemanding valuation and a supportive dividend yield, which presents a "compelling opportunity" for exposure to a recovery in consumer spending.
The source: Morgans research
