The Woolworths Group Ltd (ASX: WOW) share price is charging higher today.
In morning trade, the retail conglomerate's shares are up almost 2% to $33.49.
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Why is the Woolworths share price rising?
There are a couple of catalysts for the rise in the Woolworths share price on Friday.
The first is a roaring ASX 200 index following a surprisingly strong night of trade on Wall Street even after inflation came in hotter than expected.
Another catalyst could be a broker note out of Goldman Sachs this morning.
What did the broker say?
Goldman has been looking at the consumer staples sector this week.
And while it has trimmed its earnings estimates for consumer staple stocks to reflect a consumer shift to value, it remains very positive on Woolworths.
In fact, the broker has reiterated its conviction buy rating with a trimmed price target of $42.70. Based on the current Woolworths share price, this implies potential upside of 28% for investors over the next 12 months.
It commented:
Our top pick in the sector still remains our Buy-rated WOW (on the Conviction List), TP A$42.70/sh (previous A$44.1) implying ~30% share price upside. We see the 12m forward P/E multiple premium of WOW vs COL at 1.3x, vs historical average of 4.1x, while the FY22-25e 3yr-CAGR NPAT growth is ~10% WOW and ~3% COL as providing an opportunity to accumulate shares in a high quality retailer in Australia.
We trim our Staples (WOW, COL, MTS) comps sales growth by -0.5%-1.8% across FY23-24 mainly on lower mix growth. That said, we believe that WOW remains in an advantaged position with the increasing operational complexity playing into its strength in more advanced digital capabilities (personalized pricing and promotional efficiency as example).
