The Temple & Webster Group Ltd (ASX: TPW) share price is having a positive finish to the week.
In early afternoon trade, the online homewares and furniture retailer's shares are up over 3% to $5.75.
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Why is the Temple & Webster share price pushing higher?
Investors have been buying the company's shares on Friday after it was the subject of a bullish broker note out of Goldman Sachs.
According to the note, the broker has initiated coverage on the ecommerce company with a buy rating and $7.55 price target.
Based on the current Temple & Webster share price, this implies potential upside of 31% for investors over the next 12 months.
What did the broker say?
Goldman is bullish on the Temple & Webster share price due to the company's "material runway for long-term growth." This is being underpinned by the shift online, which is still in its infancy for the category compared to other key markets. The broker explained:
Temple and Webster is the largest pure-play online home retailer in Australia: we estimate it has 12.4% market share of the online homewares/home furnishings market, with 61% brand awareness (according to the company). We believe the business has a material runway for long-term growth, supported by a large and growing TAM driven by increasing e-commerce penetration which still lags other comparable markets (Aus 16% vs. UK/US 28%/25%), even after a large pull forward in online sales over the last 2-3 years. The significant scale that TPW has achieved, its superior digital capabilities, and data-driven approach to customer acquisition and retention position it well to continue to scale online.
Goldman also believes that the company is well-placed for growth despite the current challenging economic environment. It suggested that Temple & Webster "can deliver long term structural growth, despite a slowdown in the near term macro environment."
In addition, the broker highlights that this side of the retail market has higher barriers to entry, which bodes well for the company.
[I]n our view TPW is best placed to be a winner in a category that favours scale players, requires a specialised approach to e-commerce, and has higher barriers to entry vs. other retail categories.
All in all, Goldman believes this positive outlook makes the Temple & Webster share price great value at the current level.
