A top broker reckons this ASX retail share is a buy with a 50% upside

Could Adairs be a buy today?

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Finding ASX shares worth buying is always a hard task. Nothing is ever certain in life, and even less so in the ever-changing world of share market investing. That’s why it can often be worth paying attention to what some of the ASX’s top brokers and experts are saying. So today, let’s check out Adairs Ltd (ASX: ADH).

Adairs is an ASX retail share that specialises in homewares, bedding and linen. The Adairs share price has had a moderately pleasing past 12 months, rising by just over 13%. In saying that, it has spent the past 6 months going backwards, falling by 3.2% since last July.

As it stands today, Adairs is currently trading at a share price of $3.92, down a nasty 3.2% so far today.

Even so, Adairs is currently being rated as a ‘buy’ by a couple of top ASX brokers.

Top ASX brokers rate Adairs share price as a buy

The first is investment bank Goldman Sachs. Goldman currently rates Adairs as an ASX buy, with a 12-month share price target of $5.11. That’s almost 30% above the share price of $3.92 that Adairs shares are asking today. Goldman likes Adairs’ strong presence both in the physical and online retail spaces, as well as its current valuation.

But Goldman isn’t the only broker rating Adairs shares as a buy right now.

As my Fool colleague James covered last week, fellow broker UBS is also bullish, even more so than Goldman. UBS currently gives Adairs shares a 12-month share price target of $5.90. That implies a potential future upside of close to 50% on today’s pricing. UBS is eyeing potentially large dividend income from Adairs shares. It is expecting a full year and a fully franked dividend of 19.6 cents per share in FY2022, and 29.9 cents per share for FY23. The latter would represent a forward yield of almost 7.6% on today’s share price.

No doubt investors will be crossing their fingers that these broker opinions become fact over the next year or so.

At the current Adairs share price, this ASX retailer has a market capitalisation of $692.1 million, with a price-to-earnings (P/E) ratio of 10.99 and a dividend yield of 5.84%.

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Motley Fool contributor Sebastian Bowen owns ADAIRS FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended ADAIRS FPO. The Motley Fool Australia owns and has recommended ADAIRS FPO. 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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