Who's afraid of the big, bad Amazon? Not outgoing Metcash boss Ian Morrice, who yesterday said the threat of Amazon disrupting Australia's grocery market is overblown and independent supermarkets are better off focusing on their local customer than hitching themselves to the online bandwagon.  

The grocery wholesaler, which supplies 1683 IGA supermarkets nationwide, was the best performing stock on the ASX on Monday, jumping 5 per cent after handing down better than expected full-year results. 

But the stock has given up the bulk of those gains today, down 3.7 per cent at $2.22 as investors take another look at the results.

Credit Suisse analysts called yesterday's profit release "better than expected", although they also noted that that was against the market's "low expectations". The broker downgraded the stock to "neutral" from "outperform" in response to a higher share price against their lowered price target of $2.38 from $2.54.

UBS analysts retained their "sell" rating, saying Metcash was "executing well" and the stock was "inexpensive" but that "structural pressures remain".

Meanwhile, Deutsche Bank analysts were more impressed, upgrading the stock to "hold", writing:

While the outlook clearly remains tough, 2H was a very difficult period with market growth slowing, discounting intensifying, Aldi's rollout continuing and Woolworths resurging, yet sales didn't come under nearly as much pressure as we feared. This leaves us more comfortable that the food business can broadly stabilise while the cost-out continues.

Morgan Stanley analysts note that Metcash reported "weak top-line growth from its core supermarkets business", as Aldi rolled out stores to South Australia and Western Australia. Also weighing, the analysts write, were more IGA store closures, accelerating deflation and a softening WA economy.

But they are "overweight" the stock as they believe a lot of these headwinds are easing.

"Looking forward, we think the impact of store closures reduces, deflation moderates and as comparables get easier the supermarkets sales performance will improve," the write. And when the supermarket sales performance improves, they expect Metcash shares to re-rate".

Citi analysts are staying neutral on the stock. While they reckon that while "earnings growth delivered", it wasn't "as strong as headlines suggest": "FY17 underlying NPAT growth of 9 per cent overstates the momentum in the business, in our view".

That said, on a P/E ratio of only 10, "challenging operating conditions are priced in, with FY18e and FY19e earnings supported by cost savings and synergies".

They upgrade their target price to $2.50 following earnings upgrades.