The team at Morgans has been busy looking at a number of ASX shares this week.
Let's see if the broker is bullish, bearish, or something in between on these names. Here's what it is saying:
Image source: Getty Images
Domino's Pizza Enterprises Ltd (ASX: DMP)
Morgans highlights that trading conditions have been tougher than it expected for this pizza chain operator.
In response, the broker has downgraded Domino's shares to a hold rating (from buy) with a reduced price target of $17.60 (from $25.00). It said:
The trading environment for DMP has become more challenging than previously assumed, and we have updated our forecasts to reflect a weaker SSS (same-store-sales) outlook across all three regions, compounding cost pressures on ANZ franchisee economics, and a more adverse FX environment in Japan.
The earnings recovery, albeit modest, remains on track but it is entirely cost-driven; there is no volume improvement embedded in our numbers until outer years. We move to a HOLD rating until there is evidence of further cost management and SSS recovery. We reduce our price target to A$17.60 from A$25.00.
Super Retail Group Ltd (ASX: SUL)
The broker has been looking at this retail conglomerate's investor day update. While it left the event feeling encouraged, it isn't enough for a buy rating, especially in the tough consumer backdrop.
Morgans has retained its hold rating on Super Retail's shares with an improved price target of $12.30. It said:
SUL's Investor Day contained limited surprises, with the group setting out FY31 network targets as it looks to organically grow share (via network growth ~3% pa, and category/service expansion) and optimise the business (ERP/supply chains).
We left SUL's Investor Day encouraged by the clarity of the long-term organic growth strategy and the renewed management team tasked to execute. However, with valuation near our revised A$12.30ps price target, a softer consumer backdrop and lingering competitive pressures, we retain our Hold recommendation.
Symal Group Ltd (ASX: SYL)
Another ASX share that Morgans has been looking at is public and private infrastructure services company Symal.
Morgans is positive on the company and believes it is well-positioned to capture an increasing share of its total addressable market.
As a result, the broker has retained its buy rating and $3.35 price target on its shares. It commented:
In this note, we update our forecasts to better reflect the timing of recent acquisition settlements, along with an anticipated increase in D&A and interest expenses. While incrementally positive for FY27/28 EBITDA, the higher D&A sees our underlying NPAT decline by mid-single digits. From a valuation perspective, the roll-forward of the valuation date offsets the impact of lower earnings.
More broadly, our investment theme remains intact, with SYL forecast to capture an increasing share of the total addressable market across the key verticals of infrastructure, digital, energy and defence. Supported by additional M&A, the business could deliver early on its FY30 aspirational EBITDA target of $200m. On this basis, we reiterate our BUY recommendation, with a $3.35/sh price target.
