Are you interested in adding some ASX growth shares to your portfolio? If you are, you may want to look at the share listed below that Goldman Sachs has on its conviction list.
Here's what you need to know about this buy-rated growth share:
Temple & Webster Group Ltd (ASX: TPW)
Temple & Webster could be an ASX growth share to buy. It is Australia's leading online furniture and homewares retailer through the eponymous Temple & Webster website. It is also developing an online Bunnings competitor known as The Build.
While it is unlikely that Bunnings will be quaking in its boots over The Build, the bricks and mortar furniture and homewares market may be nervous about the prospect of losing market share to Temple & Webster in the future.
Goldman Sachs is very positive on the company's future and believes post-results weakness has created a buying opportunity for investors. It commented:
We think the negative share price reaction (-27%) is overdone, in response to a weaker than expected trading update for the first five weeks of the year which we view as largely reflecting the lapping of omicron rather than a deterioration in underlying trends. We view the balance towards profitability as a sensible shift given near term uncertainty; that said we expect the business to pivot back to active customer growth in FY24 which should drive market share gains.
Post today's sell off, we believe the market is either pricing in i) a significant downturn with TPW trading at a bottom of the cycle EV/GP multiple (2.1x FY24E vs. W trading on 2.5x); or ii) a very material impairment to its long term growth opportunity, which we saw no evidence of in the update today.
Goldman has conviction buy rating and $6.50 price target on its shares. Based on the current Temple & Webster share price of $3.53, this implies potential upside of 84% over the next 12 months.
