The Endeavour Group Ltd (ASX: EDV) share price was out of form on Thursday.
The alcohol retailer's shares tumbled 3.5% to $7.61 following the release of its third quarter trading update.
Is the Endeavour share price in the buy zone?
One leading broker that believes the weakness in the Endeavour share price as a buying opportunity is Goldman Sachs.
According to a note this morning, in response to its third quarter update, the broker has retained its conviction buy rating and lifted its price target to $8.30.
Based on the current Endeavour share price, this implies potential upside of 9.1% for investors over the next 12 months.
And with Goldman expecting a fully franked 2.5% dividend yield in FY 2022 and 3.1% in FY 2023, the total return on offer stretches to approximately 12%.
The broker commented: "We update our TP to A$8.30/sh (vs prior A$8.00/sh, implying 9.1% TP upside) to reflect EDV's 3Q22 sales update and a deep dive into the Hotels opportunity as the company begins to see accelerated recovery back to pre-COVID levels in 3Q22."
Why is Goldman bullish?
A couple of the main reasons that Goldman Sachs is bullish on the Endeavour share price are the company's digital capabilities and customer loyalty. The broker believes these leave it well-placed for growth in the future.
Goldman explained:
"We continue to be bullish on the digital consumer capabilities of EDV with 3Q22 Dan's members at 6.4m (>4m of which was active in last 6mths) and online penetration remaining at 9.6% (though lower towards end of quarter as reversion back to in store gathered pace).
We continue to believe that EDV is unrivaled in its capability to deliver a seamless omni-channel experience to consumers and can manage well through short-term cost volatilities with a less price-sensitive portfolio and high consumer loyalty. Retain Buy (on CL)."
