The Premier Investments Limited (ASX: PMV) share price was on form on Thursday.
The retail conglomerate's shares rose 3% to $27.63 following the release of its full year results.
What happened in FY 2021?
For the 12 months ended 31 July, Premier Investments reported an 18.7% increase in retail sales to $1,443.2 million and a 97% jump in statutory net profit after tax to $271.8 million.
A key driver of this growth was its Peter Alexander brand, which reported a 34.7% increase in sales to $388.2 million. This offset weakness in the Smiggle brand, which has been impacted by lockdowns.
Where next for the Premier Investments share price?
Brokers appear divided on where the Premier Investments share price is going next.
According to a note out of Goldman Sachs, its analysts have put a sell rating and $23.40 price target on its shares.
Based on the current Premier Investments share price, this implies potential downside of 15% over the next 12 months before dividends.
Goldman commented: "We upgrade our NPAT forecasts by +13.5% and +12% respectively over FY22/23e. We introduce our FY24 estimates. However, valuation still remains elevated vs. the peer group and on an associates adjusted basis. We maintain our Sell rating on PMV with a revised 12m Target Price of A$23.40, offering a total return downside of -12.4% to the current trading price."
Bullish broker
However, the team at Bell Potter don't agree with this view and are recommending its shares as a buy.
According to the note, the broker has upgraded Premier Investments' shares to a buy rating and lifted its price target on them to $31.25.
Based on the current Premier Investments share price, this implies potential upside of 13% over the next 12 months before dividends. This stretches to 16% including dividends.
Bell Potter commented: "There is no material EPS changes, although given the improving outlook for Smiggle & continued strength in PMV's other brands, we have improved the risk parameters used in our model. Including roll-forward our PT increases to $31.25 (previously $26.10)."
"While we expect a rebase in FY22 earnings, we believe this is already priced in & we now look beyond this and see the resumption of solid growth from FY23 onwards. With an implied Just Group EV/EBITDA (pre-AASB16) ~10x, we upgrade from Hold to Buy," it added.
Time will tell which broker makes the right call.
