“The ongoing scrutiny on supermarkets hurt sentiment in both Woolworths (WOW) and Coles (COL),” Raymond said.

“However, we see Coles as an interesting buying opportunity.

“COL’s third quarter 2024 sales trading update overall was marginally above expectations.

“Supermarkets were the key standout with sales growth above our forecast, while Liquor was below.

“Management said Supermarkets volumes have remained positive in the early part of fourth quarter 2024 with ongoing deflation in fresh produce and meat and a moderation in inflation in packaged categories.

“We make minor adjustments (+1%) to financial year 2024-financial year 2026F underlying earnings before interest and tax (EBIT).

“Our target price rises to $18.95 (from $18.70), and we maintain our Add rating.

“COL remains our preferred exposure in the Consumer Staples sector,” Raymond said.

 Coles (COL)

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