The Coles Group Ltd (ASX: COL) share price will be one to watch this month.
That's because on 21 February the supermarket giant is scheduled to release its half year results.
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Should you buy Coles shares before its results?
Opinion is divided on Coles shares ahead of its results release.
In the bear corner stands Goldman Sachs, which has a sell rating and $14.90 price target on its shares. This implies potential downside of 18% for investors over the next 12 months.
Goldman prefers Woolworths Group Ltd (ASX: WOW) and expects it to outperform Coles in the near term. It explained:
We expect WOW 2Q23 sales and 1H23 margins to outperform COL on more positive mix driven pricing, continued growth of Cartology and lower step-up in new supply chain implementation cost. We forecast WOW to grow 1H23 EBIT +12% YoY vs COL flat.
Bullish view
In the bull corner you'll find Morgans with an add rating and $19.50 price target. This suggests that Coles shares could rise almost 8% from current levels.
It likes Coles due to its solid balance sheet, defensive qualities, and favourable trends in consumer shopping habits. The broker commented:
Trading on 20.6x FY23F PE and 4.0% yield, we continue to see COL as offering good value with the company's solid balance sheet and defensive characteristics putting it in a good position to navigate through a weaker economic environment. The unwinding of local shopping should also help further market share gains.
It is also worth noting that Credit Suisse is positive on Coles.
So much so, earlier this week the broker upgraded the company's shares to an outperform rating with an improved price target of $19.31. It expects Coles to benefit greatly from food inflation and is forecasting strong earnings growth this year.
