The Harvey Norman Holdings Limited (ASX: HVN) share price has been out of form in recent months.
Since peaking at a 52-week high of $6.09 in August, the retail giant's shares have fallen 17% to $5.05.
Is the Harvey Norman share price weakness a buying opportunity?
One leading broker that sees the weakness in the Harvey Norman share price as a buying opportunity is Goldman Sachs.
According to a note this morning, the broker has retained its buy rating and $6.00 price target on the company's shares. Based on the current Harvey Norman share price, this implies potential upside of almost 19% over the next 12 months.
In addition, the broker is forecasting a 36 cents per share fully franked dividend in FY 2022. This implies a very generous 7.1% yield, bringing the total potential return on offer to 26%.
What did the broker say?
Goldman notes that Harvey Norman has recently released a trading update which revealed positive growth year to date in all regions outside of Malaysia versus the comparable period in 2019.
Overall, the trading update was largely in line with the broker's expectations, with sales trends in Australia and Europe remaining slightly ahead of expectations and Asia remaining weaker.
Pleasingly, the broker expects this positive form to continue due to favourable trading conditions.
Its analysts commented: "We update our earnings outlook on HVN to reflect the latest trading update. We continue to expect the underlying sales growth vs. pre-COVID levels to remain strong due to the positive housing related spending environment and an overall expected increase in spending for the home category. Additionally, we also update our FX forecasts for HVN, in line with the latest GSe. Overall, this results in a revision of group EBIT outlook by +0.1% and +0.8% respectively over FY22 and FY23e respectively. Our 12m Target Price for HVN remains unchanged at A$6.00 and we maintain a Buy rating on HVN."
