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

Citi rates NCK as Neutral

Citi notes interim results for major UK-based furniture retailer DFS Furniture plc point to softer UK footfall amid weak consumer confidence, implying a tougher backdrop for Nick Scali.

It's felt near-term UK performance will be driven by self-help initiatives, including refurbishments, brand awareness and retail execution improvements.

The broker sees a more significant risk from slowing A&NZ demand, where higher interest rates, fuel costs and potential tax changes may pressure housing-linked spending.

Alternatively, upside risk is seen via a potential Australian acquisition, which could provide synergies and support earnings in a weaker market.

Target $19.20. Neutral.

Morgan Stanley rates PMV as Overweight

Premier Investments continues to deliver strong sales growth with the pre-guided first half result in line with expectations, Morgan Stanley notes. Guidance is for FY26 EBIT of $183m.

Morgan Stanley factors conservatism into the guidance, given the interest-rate environment, while minimal impact to the second half should come from fuel and freight disruptions as the seasonal buying structure means items are already produced or in transit.

The broker notes Smiggle performed weakly, amid a -8.7% reduction in production store numbers that was partially offset by growth in wholesale.

The company intends to realign the brand with its core 6-12-year-old customer, centred on product repositioning and simplification. Georgia Chewing will become the managing director of Smiggle with the interim CEO returning to the CFO role.

Target is reduced to $16.90 from $19.20. Overweight. Industry View: In-Line.

Macquarie rates WBC as Underperform

Moving to an Underweight stance on the banking sector, Macquarie reminds investors sustained disruption in energy markets has historically preceded economic slowdowns.

Downside risk for bank share prices is anticipated as oil shocks flow through to earnings and valuations.

The broker explains elevated energy prices and higher interest rates are increasing risks to credit growth and bad debt charges.

Higher bad debt charges have driven around -1-3% EPS downgrades across the sector by Macquarie.

Across the sector, the analyst highlights CommBank holds the highest collective provisions against at-risk exposures, while ANZ Bank has lowest.

This partly reflects ANZ’s greater exposure to institutional borrowers, which typically require lower provisioning and are more likely to have hedging or supply contracts in place.

The target for Westpac falls to $33.50 from $35.00 and the Underperform rating is kept.