The Treasury Wine share price has leapt 6% in 3 weeks. Why this top broker is tipping more gains

This broker is tipping the Treasury Wine share price to gain another 18.6%.

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A group of people clink wine glasses in an outdoor, late afternoon setting to celebrate the rising Treasury Wine share price

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Key points

  • The Treasury Wine share price has had a good run in recent weeks, and that could prove to be just the beginning
  • Morgans is tipping the stock to reach $13.93
  • The broker was impressed by the company's half-year results and expects "strong double-digit growth" over the next few years

The past three weeks have been good to the Treasury Wine Estates Ltd (ASX: TWE) share price. And the fun might have only just begun. One top broker is tipping the winemaker and distributer to gain another 18%.

At the time of writing, the Treasury Wine share price is $11.74. That’s 5.86% higher than it was three weeks ago.

For context, the S&P/ASX 200 Index (ASX: XJO) has risen 2.1% over that time. Meanwhile, the company’s home sector ­– the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) – has dumped 4.6%.

Let’s take a look at why Treasury Wine has garnered this broker’s eye.

Broker tips Treasury Wine share price to gain 18%

The Treasury Wine share price could have some seriously bright days ahead if Morgans’ predictions come true.

The broker was impressed by the company’s latest half-year results, released in February.

Its earnings before interest, tax, SGARA, and material items (EBITS) slipped 6.7% in the half. But that was seemingly better than expected considering the headwinds faced by the company.

Its most renowned brand, Penfolds, saw a revenue drop of 16.3%, while its EBITS fell 19%. The fall was generally expected considering the brand struggled in the Chinese market due to tariffs.

Additionally, Treasury Wine’s management – which Morgans also likes – flagged a shift in the company’s mindset.

Treasury Wine CEO Tim Ford said the company is moving from “recovery and restructuring” to a new phase of “growth and innovation”.

“We have great confidence that by leveraging the unique strengths of our business … we are well placed to capitalise on the significant opportunities,” Ford said.

Morgans is bullish on the company’s plans for the future, saying:

The foundations are now in place for [Treasury Wine] to deliver strong double-digit growth from [the second half of financial year 2022] over the next few years.

The broker slapped a price target of $13.93 on Treasury Wine shares with an add rating.

Motley Fool contributor Brooke Cooper 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 Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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