** Shares of Australia's Metcash MTS.AX fall 9.5% to A$3.355 so far this week

** Stock of wholesale distribution firm set for its steepest weekly drop since late October 2024

** Morningstar on Monday lowered EPS estimate by 8% and 4% for fiscals 2026 and 2027, respectively; maintained fair value estimate of A$4.1

** Market reassessing timing and extent of an improvement in Metcash's EBIT margins, after flat revenue and rising operating costs like labour and rents weighed - Morningstar

** Says, while current trading conditions are challenging, it expects profits in hardware and liquor segments to improve with a cyclical recovery in their respective markets

** Firm reported 0.1% increase in HY revenue to A$8.5 billion ($5.62 billion)

** Citi lowered NPAT outlook by around 5% over fiscals 2026-2028 on Monday; lowered PT to A$3.6 but keet "neutral" rating

** MTS currently up 0.2%; stock rises 8.2% YTD

($1 = 1.5115 Australian dollars)

(Reporting by Keshav Singh Chundawat in Bengaluru)

((Keshav.singhchundawat@thomsonreuters.com))