Here’s what this broker thinks of the JB Hi-Fi (ASX:JBH) share price

Is it time to buy this retailer’s shares?

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The JB Hi-Fi Limited (ASX: JBH) share price is trading lower on Friday afternoon.

At the time of writing, the retail giant’s shares are down 2.5% to $44.46.

This latest decline means that JB Hi-Fi’s shares are now down 20% from their 52-week high.

Is the JB Hi-Fi share price in the buy zone now?

Despite the recent pullback in the JB Hi-Fi share price, the team at Goldman Sachs continue to sit on the fence with it.

According to a note out of the investment bank this week, its analysts have retained their neutral rating and lifted their price target slightly to $49.80.

Though, it is worth noting that despite its neutral rating, its price target implies some strong potential returns.

Based on the current JB Hi-Fi share price, Goldman’s price target suggests there’s potential upside of 12% over the next 12 months.

And that’s before dividends. If you include the $2.20 per share fully franked dividend the broker is forecasting in FY 2022, the potential return increases to approximately 17%. Not bad for a neutral rating.

What did the broker say?

Goldman has an issue with the valuation of the JB Hi-Fi share price and believes its positive outlook is largely priced in.

It commented: “While our forecasts for JBH imply a strong outlook of +6.5% EBIT CAGR over FY19-24e, we believe this is largely priced into the valuation.”

“The strong outlook remains largely priced in with the stock currently trading at c. 13.6x, a 1.6x premium to HVN and well ahead of peer group median of 9.6x,” Goldman added.

In light of this, the broker has a preference for Harvey Norman Holdings Limited (ASX: HVN) at present.

So much so, this week the broker upgraded its shares to a buy rating with an improved price target of $6.00. This implies potential upside of 21% over the next 12 months.

Should you invest $1,000 in JB Hi-Fi right now?

Before you consider JB Hi-Fi, you'll want to hear this.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Harvey Norman Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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