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Macquarie Analysts Tip JB HI-FI To Outperform

Macquarie analysts expect JB HI-FI to outperform previous forecasts, raising their price target to $41 per share. As of 11am today JB HI-FI’s share price stood at $38.90.

“We see strong potential for it to surprise to the upside at financial year 2020 results,” Macquarie analysts told the Australian Financial Review.

In its Q3 FY20 sales update, JB HI-FI Australia’s sales were up 11.6% and The Good Guys (also part of the JB HI-FI Group) increased by 13.9%. This strong growth was driven by the surging demand for appliances and home office supplies brought on by COVID-19.

JB HI-FI group reported that it had seen this sales growth continue into April and early May as customers sought out “home appliances and technology they need for working, learning and entertainment whilst at home”.

JB HI-FI selling out of home office supplies due to COVID-19

Harvey Norman has not yet released its Q3 FY20 results, but Macquarie analysts expect that this uplift was witnessed across the board.

“Industry feedback suggests almost all categories in consumer electronics and home appliances are in growth and margins are the best they have been in a long time, with consumers far less picky on brands and happy to pay full ticket prices,” the analysts said.

“We had originally expected additional COVID-19 costs would outweigh less promotional activity, but volumes are said to be high enough to compensate these.”

Macquarie analysts also warned that once the added JobSeeker support comes to an end in September, there could be a downward spend in discretionary spending.

“The portion of the Jobseeker population who are now earning more than they were before has helped prop up consumer electronics spend,” the analysts said.

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