The JB Hi-Fi Ltd (ASX: JBH) share price has jumped higher today. As of 11.30 am, it is 6.64% higher at $114.99 a piece, recovering most of yesterday's decline.
Over the year, JB Hi-Fi shares are 57.56% higher.
The retailer's share price crashed 8% on Monday to finish the day at $107.83. This followed its full-year results for FY 2025.
The company delivered a strong result and revealed a positive start to the new financial year. But news that its CEO is stepping down spooked investors.
Following the results announcement and investor sell-off, Macquarie Group Ltd (ASX: MQG) wrote a note to investors detailing its latest stance on the stock.
Macquarie upgrades JB Hi-Fi shares
The broker has updated its outlook on JB Hi-Fi shares to outperform. It also raised its target price to $118 per share, up from $112 previously.
At the time of writing, this represents a potential upside of 2.61% for investors over the next 12 months.
"Upgrade from Neutral to Outperform. The sell-off alongside the result is an overreaction, in our view. JBH remains well-placed in a sector seeing structural tailwinds," Macquarie said in its investor note.
"Valuation: TP increases ~5% from $112 to $118, with approx half driven by earnings increases and approx half as we lower risk-free rate 10bps to 4.20% (consistent with MRE platform)."
Macquarie's take on the company's FY25 results
The broker notes that the company's FY25 result was broadly in line with Macquarie's estimates and 1% ahead of consensus.
The trading update also points to the sustainability of top-line growth.
"JB AU's comparable sales growth has remained in the mid-to-high single-digits over recent periods, with 3Q25 growth of +6.0% vs pcp accelerating to +8.2% in 4Q25. Management noted 4Q25 saw an outsized benefit from the delivery of pre-orders for the Nintendo Switch 2 console, suggesting "underlying" comparable sales growth of ~6%," Macquarie said in its note.
"Positively, solid growth was maintained in Jul-25 at +5.1% providing comfort in the quality/growth characteristics of JBH. Although the group will see a diminishing benefit from Switch 2, we continue to see growth over the medium term driven by: i) Next-gen laptop sales; and ii) the COVID replacement cycle; both of which were called out at the 2025 Macquarie Conference."
As a result, the broker has lifted its medium-term comparable sales forecasts for JB Hi-Fi AU to an average of 5% over the next three years.
As expected, JB Hi-Fi announced a special DPS which was ahead of Macquarie's forecast (100cps versus forecast of 80cps).
"This points to ongoing strength in cash generation and balance sheet positioning. Moving forward, JBH will pay out 70-80% of NPAT (65% previously), which results in more consistent cashflow returns to shareholders while still permitting balance sheet flexibility for strategic investment. All else equal, JBH will remain in a ~$60m net cash position following payment of the final and special dividends."
