Retailers Mixed | Aristocrat

17 November 2022

New Zealand Market Movers 

The New Zealand market (NZX 50 Index, 0.1%) was a touch lower on Wednesday as investors brace for more corporate earnings. 

Pacific Edge was up +3.1% with investors eagerly wait for their result next week but more importantly, provide light on whether Medicare provider Novitas will continue using Pacific Edge’s Cxbladder tests.  

Kathmandu shares rose +4.8% after reporting +62% jump in sales for the first quarter, over the same corresponding period last year, with the previous year result greatly impacted by lockdowns across Australasia.  

Australia Market Movers 

The Australian market (ASX 200 Index, -0.3%) fell on Wednesday, as geo-political risks re-emerge across the market following a missile incident in Poland.

Energy and Materials were strong performers while the remainder of the market were in the red. Lithium producer Pilbara Mineral rose +1.9% after announcing it would start paying dividend from 2023 financial, listing other EV related miners higher. Agriculture Chemicals company Nufarm jumped +8.9% as its net profit surged +65% from last year and gave upbeat guidance. 

Europe Market Movers  

European markets (Stoxx 600 Index, -1.0%) fell with retail and autos leading losses as investors were spooked by the attack on Poland. 

US Market Movers 

US markets (S&P 500 Index -0.8%) fell overnight as optimism in the recent sessions wanes off.  

US retail sales for the month of October were stronger than expected, indicating that the economy is still not slowing down and that easing rate hike hopes that started late last week diminish. With consumer savings accumulated over the pandemic providing funding for spending support in certain areas.  

Contrary to the above Target shares slumped –13% as budget constraint families struggle with inflation heading into the holiday season sending other retailers lower.  

Stock In Focus:  Aristocrat (ALL.ASX) 

Aristocrat shares were down –5% yesterday despite delivering a sound full year result where operating revenue rose +17.7% and net profit after tax rose +27.1% as casinos and travel reopened. Managment also expects to achieve modest growth in 2023, but investors appeared wary given slowdown in digital gaming growth towards the end of the year. 

 
We still view Aristocrat favourably, and while near term growth could be subdue, it is still well placed in the gaming sector and reasonably priced compared to many tech companies with strong cash reserves to make value add acquisitions. For that reason, we remain Buy (High Risk) rated, however investors should be patient picking up shares on further weakness over near-term (3-12months). 
  

What Markets will be Watching this Week (UTC +13) 

Monday 
Elders earnings 

Tuesday 
AU RBA Meeting Minutes 

GB Unemployment Rate SEP 

Infratil earnings 

Wednesday 
US Producer Price Index MoM OCT 

GB Inflation Rate YoY OCT 

Walmart earnings 

Home Depot earnings 

Thursday 
US Retail Sales MoM OCT 

AU Unemployment Rate OCT 

Nvidia earnings 

TJ Maxx earnings 

Target earnings 

Friday 
Alibaba earnings 

Applied Materials earnings 

Ryman earnings 

Saturday 
JD.com earnings 

The New Zealand market (NZX 50 Index, 0.1%) was a touch lower on Wednesday as investors brace for more corporate earnings.  Pacific Edge was up +3.1% with investors eagerly wait for their result next week but more importantly, provide light on whether Medicare provider Novitas will continue using Pacific Edge’s Cxbladder tests.

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