This analyst rates the Accent (ASX:AX1) share price a buy

Is it time to buy this retail share?

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shoes asx share price represented by white shoes against pink and blue background AX1 share price downgrade

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The Accent Group Ltd (ASX: AX1) share price has been out of form in recent months.

Since peaking at a record high of $3.08 in April, the footwear retailer’s shares have pulled back by 30% to $2.15.

This means the Accent share price is now down 9% year to date.

Is the Accent share price in the buy zone now?

One leading broker that believes the weakness in the Accent share price is a buying opportunity is Bell Potter.

According to a recent note, the broker has a buy rating and $2.90 price target on its shares.

Based on the latest Accent share price, this implies potential upside of 35% over the next 12 months.

In addition, the broker expects more generous dividends from Accent in FY 2022. Its analysts have pencilled in a fully franked dividend of 9.3 per share over the 12 months.

If you include this, the potential return stretches to a very attractive 39%.

What did the broker say?

Bell Potter likes Accent due to its strong market position, its innovation and expansion strategy, and omni channel capability.

It commented: “We rate AX1 Buy with a PT of $2.90. AX1’s strategic focus has moved from acquisition and integration, to innovation in its core business and expansion through new concepts and small targeted acquisitions. AX1 has a leading omni-channel capability with The Athlete’s Foot, Platypus, Skechers and Hype as its key footwear retail platforms. AX1 also has a number of new footwear concepts including The Trybe, PIVOT and online marketplace ‘Cremm’. Through a “high service & more tailored” market position, AX1 seeks to achieve greater differentiation vs peers as well as create perceived value across its retail platforms.”

Overall, the broker believes this leaves Accent well-positioned for growth over the coming years. And with the Accent share price trading at just 16x earnings at present, it appears to believe this is an attractive entry point for investors.

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 has recommended Accent Group. 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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