Metcash Ltd (ASX: MTS) shares are trading in the red again on Tuesday afternoon. At the time of writing the share price is 0.6% lower at $3.34 a piece. The shares are now down 9.49% since the ASX opened on yesterday morning. Over the past month Metcash shares have plummeted 12.79%.
Trading in Metcash shares, and around 50 other ASX-listed companies, was suspended on Monday amid a platform outage. The wholesale distribution and marketing company behind the IGA supermarket chain, was the largest company caught up in the outage. Metcash requested a trading halt after it was unable to release a presentation about its FY26 first half year results while an investor call was underway.
For the six months ended 31 October, Metcash reported a 0.1% increase in group revenue. It also posted a 0.3% increase in profit after tax, and a 2% lift in its EBITDA. This was largely driven by strong growth in its Food pillar.
Following the company's results, Macquarie analysts wrote a note to investors with their latest outlook on the stock.
Target price lowered for Metcash shares
The broker confirmed its neutral rating on Metcash shares but slashed its target price to just $3.50. This is down from $4.00 previously. At the time of writing that represents a 4.8% upside for investors over the next 12 months.
"EBITDA declines of ~5-9% over medium-term driven by all segments, with the largest decline in Hardware given lower margins," the broker said.
We cut our TP 12.5% to $3.50, consistent with cashflow changes, partly offset by ~10bps reduction in risk-free rate to 4.2%.
With competitive pressures weighing across business and more subdued outlook for new housing creation, we see risks as evenly balanced at current pricing.
What else did Macquarie have to say?
Metcash's underlying EBIT for the first half of FY26 was 5% below market expectations and 10% lower than Macquarie estimates. The largest variances were in the company's Hardware and Liquor segments.
Looking forward, we remain cautious on the potential for margin recovery with management calling out competition in Food and Hardware, in addition to evidence of heightened competition in Liquor (e.g., COL strategy and EDV response).
"The other key positive was cash conversion, with the 3-year cash realisation ratio at ~106%, well ahead of the 80-90% guidance range. Management expects this to revert to the upper end of the range," Macquarie said.
