Coles Group Ltd (ASX: COL) shares have fallen again on Monday.
At the time of writing, the supermarket giant's shares are down 1% to $15.15.
This leaves them trading within a whisker of a 52-week low. Is this a buying opportunity for investors? Let's find out.
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Should you buy Coles shares?
The broker community is feeling relatively mixed when it comes to Coles shares.
For example, the teams at Citi and Morgans are positive on the company and have the equivalent of buy ratings on its shares with price targets of $17.50 and $16.60, respectively.
This implies potential upside of 10% to 15% for investors over the next 12 months from current levels.
Citi notes that "Coles Food 1Q24 sales missed our bullish forecast and were slightly below consensus." However, its analysts "make minimal changes to [their] forecasts, with lower sales offset by an improved gross margin outlook."
Morgans also notes that Coles' "sales update overall was slightly weaker than anticipated." But with its shares "now trading on 20.1x FY24F PE and 4.4% yield" the broker sees enough value to upgrade its rating.
The bears
Analysts at Goldman Sachs and Morgan Stanley are in the bear camp. They have the equivalent of sell ratings and price targets of $14.70 and $14.75, respectively, on Coles' shares. This suggests modest downside of 2.5% to 3% from current levels.
Goldman continues to forecast below consensus earnings and doesn't see enough value on offer with its shares to have a better rating. It commented:
After factoring in slightly higher lease interest from ADC becoming operational, our NPAT forecasts are changed by 0-2% respectively. At TP of A$14.7, the TSR is 2% and it is a sector relative call with COL having bottom quartile TSR amongst our coverage and our FY25/26 EPS remains 13-14% below Factset consensus.
