The Treasury Wine Estates Ltd (ASX: TWE) share price has been a strong performer in 2021.
Since the start of the year, the wine company's shares have risen almost 24%.
This is more than double the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.
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Can the Treasury Wine share price rise further?
The good news is that one leading broker doesn't believe it is too late to buy Treasury Wine's shares.
According to a note out of Morgans, its analysts have retained their add rating and lifted their price target on the company's shares to $14.06.
Based on the current Treasury Wine share price, this implies potential upside of approximately 19% over the next 12 months.
What did the broker say?
Morgans notes that Treasury Wine has recently announced the acquisition of Napa Valley-based luxury wine business, Frank Family Vineyards (FFV) for US$315 million (A$432 million). The broker is a fan of the deal and expects it fill a key gap in its portfolio and support margin expansion.
Its analysts commented: "The acquisition is in line with Treasury Americas strategy and will strengthen a key gap in its chardonnay portfolio. Importantly, FFV has generated solid earnings growth over many years and is a high margin business. It should see TWE achieve its margin target two years earlier than planned. The acquisition is immediately EPS accretive and US$5m of cost synergies are expected by FY24."
This has ultimately led to Morgans upgrading its earnings forecasts and price target on the Treasury Wine share price accordingly.
Morgans concluded: "We have upgraded our forecasts, believing that the strategies TWE has in place will deliver solid earnings growth over coming years. We see recent share price weakness as a great buying opportunity in this high quality company. Add maintained."
