Morgan Stanley sets Myer stock with overweight rating, A$1.10 target
Investing.com
Published Mar 05, 2025 06:23AM ET
On Wednesday, Morgan Stanley commenced coverage on Myer Holdings Ltd. (MYR:AU) (OTC: MYRSY) with a positive outlook, assigning an Overweight rating and setting a price target of AUD1.10. The firm underscored the company's potential for a significant turnaround, acknowledging the high execution risk involved.
The new valuation reflects Morgan Stanley's confidence in Myer's current strategic direction, which is in the initial phase of a substantial transformation, including the integration of Apparel brands. The analysts believe that if Myer successfully executes its plan, the share price could see an increase of over 100%, with a bull case valuation of A$1.70 per share. This would represent an upside of approximately 125%. Conversely, the bear case valuation of A$0.40 per share would entail a 47% downside, predicated on the possibility that Myer could continue facing structural challenges and fail to realize apparel synergies.
Morgan Stanley's analysts find the risk/reward ratio of 2.7:1 to be appealing, given the high stakes of the company's turnaround narrative. They have expressed particular confidence in Myer's leadership, highlighting the roles of Olivia Wirth, the Executive Chair of MYR and former CEO of QAN Loyalty, and Solomon Lew, Chairman of PMV, who is anticipated to join the MYR board. Lew's significant investment in Myer, holding a 27% stake and being the largest shareholder, is seen as a strong alignment of interests with the company's success.
The investment firm also commends Myer's revised strategy, which emphasizes the development of higher-margin, differentiated, exclusive, and private label brands. This strategic shift is expected to play a pivotal role in the company's potential resurgence. The analysts note that while the execution of these plans will not be straightforward, the expertise and track record of the key individuals at the helm may mitigate some of the risks involved.
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Written By: Investing.com
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