Endeavour Group Ltd (ASX: EDV) shares are heading in the right direction on Tuesday.
In afternoon trade, the beaten-down drinks company's shares are up 2% to $6.08.
This doesn't change much on a 12-month basis, though. As you can see below, the company's shares are still down approximately 25% since this time last year.
Image source: Getty Images
Is now the time to buy Endeavour shares?
Now certainly could be a great time to pounce on Endeavour shares if analysts at Goldman Sachs are on the money with their recommendation.
According to a note, the broker has reiterated its buy rating on the company's shares with a trimmed price target of $7.00. It has also added Endeavour to its coveted conviction list.
Based on its current share price, this implies a potential upside of 15% for investors over the next 12 months.
Goldman also expects dividends per share of 21 cents in FY 2023 and then 22 cents in FY 2024. This equates to yields of 3.5% and 3.6%, respectively.
What did the broker say?
One of the key reasons that the broker is bullish on Endeavour is its clear leadership position in a staple category. Goldman explains:
Per ABS data, liquor retail has grown 5.3% CAGR in the last decade (FY12 to FY22) compared to grocery at 4.3%. EDV has one of the strongest relative market shares seen within consumer categories domestically, with 37% estimated value share vs the next key competitor Coles Liquor at 13% share as of 2022. This compares to WOW vs COL of 35% [supermarkets] share vs 27% share respectively.
We see EDV's retail advantage particularly in 1) its omni-channel capability, with Dan's and BWS website traffic 6x that of its closest peer, while 2) superior loyalty of its Dan's membership where its 4.9mn active members are supported by attractive member pricing. While EDV has reversed some market share since the COVID peak, we expect recent trade down activities will benefit Dan's given its value positioning.
In light of this, Goldman believes Endeavour shares have been oversold and that investors should be snapping them up while they are cheap.
