What Happened to the Metcash Ltd Share Price?
Shares in the owner of the IGA Supermarkets brand, Metcash Ltd [ASX:MTS], slumped by more than 4.8% in today’s weak session on the Aussie stock market. Metcash shares are slipping back toward the 13-year low they hit in mid-March. Metcash has lost around half its value in just five months.
Why Did This Happen to the Metcash Share Price?
Sentiment has turned against Metcash. Investors are worrying more about the competitive threat posed by the likes of Aldi.
Late last week, the firm underwent a senior management reshuffle, but that hasn’t stopped the research team at investment bank UBS Group AG [NYSE:UBS] from slashing its price target on Metcash this morning by 35% to $1.30.
Metcash’s grocery business is in dire need of rejuvenation. Investors are tipping the turnaround will take some time — and have marked down Metcash’s share price accordingly.
What Now for Metcash Ltd?
Metcash will not wither and die. Its well-located store network gives it a potential advantage over competitors, and the key now is to find a profitable way to offer customers better value. At a certain price point, Metcash shares will provide irresistibly good value.
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Cheers, Tim Dohrmann
Small-Cap Analyst, Australian Small-Cap Investigator