The All Ordinaries Index (ASX: XAO), or All Ords, stock Nick Scali Limited (ASX: NCK) continues to climb following its FY24 first-half result and multiple broker upgrades. The Nick Scali share price is up 6% at $14.84 at the time of writing after reaching a 52-month high of $15.09 this morning.
The furniture retailer surprised and delighted the market yesterday after its report for the first six months of FY24 beat expectations.
And brokers have been busy upgrading their views on Nick Scali shares.
Broker upgrades
According to reporting by The Australian, the ASX retail share has seen three brokers increase their ratings on the ASX All Ords stock.
Broker Jarden Securities raised its rating to overweight (which is positive) and increased the price target to $13.87. A price target is where the broker thinks the share price will be in 12 months.
Macquarie analysts have raised their price target on the company to $14.90, which is slightly higher than where the Nick Scali share price is currently trading.
Wilsons increased its rating to overweight on Nick Scali shares and bumped up the price target by 36% to $15.40.
Why has the Nick Scali share price responded so positively?
The Nick Scali FY24 first-half result saw revenue fall 20.2% to $226.6 million, and net profit after tax (NPAT) sank 29% to $43 million. However, group written sales orders for the period were $212.7 million, up 1.1% year over year, and the net profit was above its guidance range of between $40 million and $42 million.
Revenue in the prior period of $226.6 million was consistent with written sales order levels and typical delivery lead times. Revenue in the prior period benefited from increased deliveries as the elevated June 2022 order bank reduced with lead times returning to pre-COVID levels.
So, the ASX All Ord stock's underlying revenue actually slightly increased during the period. Nick Scali also reported the group gross profit margin of 65.6% was much higher than 62% in HY23. Operating expenses were $4.8 million lower in HY24 than HY23, thanks to "tight cost control and lower logistic costs."
Other positives included a strong dividend of 35 cents per share, an additional $20 million of corporate debt repaid and ongoing progress of its new Queensland distribution centre. It also continues to steadily open new stores – it opened a new, larger Nick Scali store in South Australia, and opened two Plush stores (in Queensland and South Australia) and closed one.
The company has a long-term target of operating 86 Nick Scali stores and between 90 and 100 Plush stores.
January 2024 saw written sales orders of $58.9 million, which was up 3.6% year over year. The good performance seems to be continuing into the 2024 calendar year.
Nick Scali share price snapshot
Shares in the company have lifted around 20% since the start of 2024.
