Woolworths Group Ltd (ASX: WOW) shares are on course to end the week on a positive note.
In afternoon trade, the retail giant's shares are up 1% to $35.54.
Is it too late to buy Woolworths shares?
The good news is that analysts at Goldman Sachs don't believe for a second that it is too late to snap up the supermarket operator's shares.
In fact, the broker sees enough value on offer here to have the company on its coveted conviction list. These are its highest recommended shares.
According to the note, in response to Woolworths' quarterly update, the broker has retained its conviction buy rating with an improved price target of $42.40.
This implies a potential upside of approximately 19% for Woolworths' shares from current levels. In addition, the broker is expecting a fully franked 3.1% dividend yield in FY 2024, which boosts the 12-month total potential return beyond 22%.
What did the broker say?
Goldman was pleased with the company's performance in the first quarter and believes it points to further market share gains for its supermarkets. It said:
WOW noted that Oct to date sales trends were largely in-line with 1Q accelerating exit growth rates for eComm across AU Food, NZ Food and Big W. We expect this to further benefit WOW's market share as it has a larger leadership vs COL in online.
In light of this and its attractive valuation, the broker sees Woolworths as a top option for investors today. It concludes:
We are Buy rated (on Conviction List) on the stock as we believe the business has among the highest consumer stickiness and loyalty among peers, and hence has strong ability to drive market share gains via its omni-channel advantage, as well as pass through any cost inflation to protect its margins, beyond market expectations. The stock is trading below its historical average (since 2018), and we see this as a value entry level for a high-quality and defensive stock.
