Woolworths shares climb as Macquarie sees 'buying opportunity'
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The news: Macquarie says the release of the competition regulator's final report on Coles and Woolworths, following a year-long inquiry into grocery prices, may present a buying opportunity for the two supermarket giants.
The numbers: Both Woolworths (2%) and Coles (0.4%) were trading higher at 1:15pm AEDT.
The context: Macquarie upgraded its rating on Woolworths to 'outperform', and reiterated its existing 'outperform' rating on Coles.
Macquarie analysts also noted that the final report by the Australian Competition and Consumer Commission (ACCC) later this month "may create a buying opportunity".
They said analysis of share price performance related to three major consumer-facing regulatory inquiries — into the banks, Qantas and childcare — suggests the market tends to "sell the rumour" and "buy the fact".
100 days prior to those final reports being released, the groups on average delivered a -1% return, the analysts said. However, upon conclusion or release of the final reports, the groups generated an average return of 17% following respective events.
The analysts also flagged that Woolworths is currently trading close to a five-year low relative valuation compared to Coles, largely driven by negative sentiment around the ACCC inquiry.
The move is also part of Macquarie's shift to defensive exposures, such as Woolworths and Coles, driven by renewed global growth concerns.
The source: Macquarie research
