Morgan Stanley slashes its target for KMD Brands to 35c from 55c after the 2H trading update missed expectations. The Equal-weight rating is retained. Industry view is In-Line.

FY24 earnings (EBITDA) guidance for NZ$50m was a -28% miss compared to the consensus estimate. The broker decreases its earnings (EBITDA) forecasts by between -17-38%, noting negative operating leverage.

While there is upside should management execute on medium-term targets, Morgan Stanley has little confidence these can be attained, particularly for the Kathmandu brand which has experienced multiple execution issues against a more competitive backdrop.

Sector: Retailing.

Target price is $0.35.Current Price is $0.33. Difference: $0.02 - (brackets indicate current price is over target). If KMD meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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