The Goodman Group (ASX: GMG) share price dropped on Tuesday after the market gave a lukewarm response to the company's full year results for FY 2022.
The integrated industrial property company's shares ended the day 0.5% lower at $20.55.
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Is the Goodman share price good value now?
While the market didn't respond overly positively to Goodman's results, the team at Goldman Sachs was pleased. So much so, this morning the broker has reiterated its bullish view on the company's shares.
According to the note, Goldman has retained its buy rating and $25.40 price target on its shares.
Based on the current Goodman share price of $20.55, this implies potential upside of approximately 24% for investors over the next 12 months.
What did the broker say?
Goldman was pleased with Goodman's performance and believes it is well-placed to deliver further strong growth in FY 2023.
It commented:
GMG continues to demonstrate its strong platform and positioning as evident in today's result, supported by our expectation of a strong outlook for the Industrial sector more broadly, with a number of favourable fundamentals underpinning future long-term demand for industrial space. We expect solid rental growth as demand for high quality logistics space continues to outpace available supply.
The broker also believes that management's operating earnings growth guidance of 11% for FY 2023 could prove to be conservative. Particularly given management's tendency to guide lightly to begin with and upgrade its guidance as the year progresses.
It explained:
Although the macro environment remains challenged, we believe there is upside risk to its conservative guidance as the Group has historically "Guided light", coming in ahead of initial estimates. Given GMG's preference to own, develop and manage high-quality industrial assets in key infill markets globally, we believe it is well-positioned to capture market rental growth, which when coupled with elevated investment demand for industrial assets will assist in contributing to AUM growth over time.
Goldman is expecting Goodman to deliver operating earnings per share growth of 16.7% in FY 2023.
All in all, the broker feels this and its positive long term outlook makes the Goodman share price good value at the current level.
