OUR QUEST IS NOT TO BE BULLISH OR BEARISH, BUT TO CORRECTLY ASSESS FUTURE TRENDS

UBS rates DTL as Neutral

After taking another look, UBS upgrades the target price to $11 from $8.50, noting the 18% rise in the share price might be an overreaction, but the company is experiencing strong industry tailwinds, the analyst gleans post management discussions.

The FY26 result was broadly in line at GP but mid-single-digit ahead of consensus for both revenue and PBT, with NPAT 9% ahead of UBS due largely to better-than-expected operating costs.

Robust industry tailwinds from ongoing compute and data centre infrastructure spending, Windows 11 upgrades, Copilot licence rollouts and AI-related software demand, while weakness in Services is considered transitional.

PBT forecasts are upgraded by 12%, 11% and 13% across FY27-FY29, respectively. The analyst sees upside risk given early indications of strong FY27 trading and management's typically conservative commentary.

First take: UBS retains Neutral and an $8.50 target after strong cost control drove FY26 profit before tax 9% above its forecast and 4% above consensus.

Revenue increased 13%, helped by Software Solutions, but Services gross profit declined -2% and its margin missed UBS by 100 basis points.

The broker sees the headline result as solid, although the divisional mix and margin weakness temper the positive earnings surprise.

Citi rates NCK as Neutral

Citi sees trends evident in Adairs' ((ADH)) FY26 results as relevant read-throughs for Nick Scali, Beacon Lighting and Temple & Webster, particularly regarding category exposure and online penetration.

Adairs' result also reinforces the ongoing shift towards online shopping, the broker observes with Adairs’ online sales rising 9.4% and Mocka continuing to grow strongly.

It's noted consumers appear to favour smaller-ticket homewares and refresh categories over larger-ticket furniture purchases.

This is supported by strong growth at Adairs and Mocka, while Focus on Furniture sales fell -5.6% amid softer demand for larger-ticket goods.

For Nick Scali: Neutral. Target $14.50.

Macquarie rates NGI as Outperform

Navigator Global Investments' FY26 earnings fell -10% year on year, in line with guidance, while a -19% fall in profit beat Macquarie by 8%. 

Lighthouse delivered a 16% earnings increase, while NGI Strategic earnings moderated -23%, with lower profit distributions cycling strong results in FY24 and FY25. 

Completion of Stable acquisition provides for material earnings growth in FY27, Macquarie notes, with capacity on the balance sheet to fund additional M&A. Target falls to $3.24 from $3.28, Outperform retained.