Nick Scali Limited (ASX: NCK) shares spiked to a record-high of $25.50 in lunchtime trade on Thursday. Since the close of the ASX on Tuesday, the shares have climbed 13.2%. Over the year, the shares are now 80.88% higher.
Nick Scali has piqued investor interest after its managing director, Anthony Scali, said the company is on track to comfortably beat last year's first-half profit result on Tuesday.
The company expects sales revenue for the first half of FY26 to be 7% to 9% higher than the previous year.
Following the announcement, Macquarie Group Ltd (ASX: MQG) analysts wrote to investors with their latest expectations for the stock.
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Nick Scali is scaling up
The broker confirmed its outperform rating on the shares. It also raised its 12-month target price to $28.20, up significantly from $21.90 previously.
At the time of writing, this represents a potential upside of 10.6% for investors.
"Valuation: TP increased to $28.20, from $21.90. We use a NTM EV/EBIT of 17x (from: 14.1x), a +9% premium to the Small Cap Industrials Average of 15.6x. Increase in EV/EBIT driven by ANZ out-performance vs. weak macro/ peers + growing UK potential," it said in its investor note.
"We maintain our Outperform, given ANZ is demonstrating market share growth and the UK is ramping-up ahead of expectations (& has further rollout potential >21 current stores). Our TP TSR implies +15% NTM upside."
Nick Scali's ANZ business and UK strategy are a success story
The broker noted that Nick Scali's ANZ business is outperforming its peers and winning market share from weaker-performing furniture brands.
"Whilst market expectations of further rate-cuts in Australia have moderated since the FY25 result (Aug-25), and NCK peers (such as ADH: -16% share price MTD, BLX: -7% share price MTD) have reported weakness in consumption for their household furnishings, NCK has demonstrated accelerating sales growth – implying market share gains," Macquarie said.
"Given NCK's typical lack of significant promotions over this period, we also see low likelihood of NCK ANZ's strength being attributable to promotional stimulation of demand. Indeed, NCK's 1H ANZ NPAT guidance of $39m-$40m (MRE: $39.2m), alongside 1H26 sales growth guidance of +7%-9% (MRE: +8.5%) – implies that this strength is not attributable to margin sacrificing promotions."
Meanwhile, its business strategy of acquiring and refurbishing the Fabb store portfolio in the UK appears to be working. The UK segment of the business has accelerating sales, and its gross margins are ahead of expectations.
"Whilst still early in the strategy, NCK is once-again demonstrating its ability to acquire, refurbish & growth furniture store portfolios….We expect the UK business to be break-even in FY26E, noting that NCK's progress on written sales orders ($7.6m in Aug/Sep) will accelerate as brand presence grows," the broker said.
