Endeavour Group Ltd (ASX: EDV) shares are heading in the right direction on Tuesday.
In afternoon trade, the beaten-down drinks companyâs shares are up 2% to $6.08.
This doesnât change much on a 12-month basis, though. As you can see below, the companyâs shares are still down approximately 25% since this time last year.
Is now the time to buy Endeavour shares?
Now certainly could be a great time to pounce on Endeavour shares if analysts at Goldman Sachs are on the money with their recommendation.
According to a note, the broker has reiterated its buy rating on the companyâs shares with a trimmed price target of $7.00. It has also added Endeavour to its coveted conviction list.
Based on its current share price, this implies a potential upside of 15% for investors over the next 12 months.
Goldman also expects dividends per share of 21 cents in FY 2023 and then 22 cents in FY 2024. This equates to yields of 3.5% and 3.6%, respectively.
What did the broker say?
One of the key reasons that the broker is bullish on Endeavour is its clear leadership position in a staple category. Goldman explains:
Per ABS data, liquor retail has grown 5.3% CAGR in the last decade (FY12 to FY22) compared to grocery at 4.3%. EDV has one of the strongest relative market shares seen within consumer categories domestically, with 37% estimated value share vs the next key competitor Coles Liquor at 13% share as of 2022. This compares to WOW vs COL of 35% [supermarkets] share vs 27% share respectively.
We see EDVâs retail advantage particularly in 1) its omni-channel capability, with Danâs and BWS website traffic 6x that of its closest peer, while 2) superior loyalty of its Danâs membership where its 4.9mn active members are supported by attractive member pricing. While EDV has reversed some market share since the COVID peak, we expect recent trade down activities will benefit Danâs given its value positioning.
In light of this, Goldman believes Endeavour shares have been oversold and that investors should be snapping them up while they are cheap.
