If you are wondering whether you should buy Woolworths Group Ltd (ASX: WOW) shares, then it could be worth hearing what Bell Potter is saying about the supermarket giant.
Does it think the supermarket giant's shares are a buy, hold, or sell? Let's find out.
Image source: Getty Images
Should you buy, hold, or sell Woolworths shares?
Bell Potter highlights that Woolworths has announced plans to close its MyDeal business by the end of September. The broker notes that its acquisition of the ecommerce company has proven to be a reasonably expensive mistake for Woolies. It said:
WOW has announced that it will close the MyDeal customer site by 30/09 and focus the marketplace offering into Big W Market and Everyday Market. The closure comes three years after WOW invested $218m in acquiring an 80% interest in the business and is expected to result in cash charges of $90-100m (largely buying out minorities and redundancy costs) and a further $45m in non-cash charges (largely impairments).
The good news is that the closure of MyDeal means that it will shortly bring an end a major drag on the earnings of its marketplace business. It adds:
The MyDeal business was consolidated within Woolworths Marketplace in 2024, and this division in total reported a $36m EBIT loss in 1H25, with declining GMV within the Mydeal business in 1H25 (and 3Q25). While individual losses have not been separately disclosed WOW has stated that the closure is expected to result in a meaningful reduction in Marketplaces losses and we note the business generated a $15.5m NPAT loss the year prior to consolidation.
We have incorporated the MyDeal closure into our forecasts which has resulted in NPAT changes of +1% in FY26e and +1% in FY27e.
However, this isn't enough for Bell Potter to recommend Woolworths shares as a buy.
Hold rating
According to the note, Bell Potter has retained its hold rating with a slightly improved price target of $31.90.
Based on the current Woolworths share price of $30.99, this implies potential upside of just 2.9% over the next 12 months. And with a 2.7% dividend yield forecast over the period, the total potential return is under 6%.
Commenting on its hold recommendation, the broker said:
Our Hold rating is unchanged. Despite the associated cash closure and impairment charges associated with MyDeal, we view the move to close a peripheral loss-making business as a sound decision. While the EPS benefit is modest, it demonstrates a willingness to move away from non-core distractions and follows more recent moves to reduces operating expenses ($400m support office simplification program). Trading at ~9.0x FY26e EBITDA, WOW is trading at a multiple broadly comparable to COL and international peers.
