Now could be the time to buy Goodman Group (ASX: GMG) shares according to analysts at Citi.
Its analysts have responded very positively to the ASX 200 industry property share's first quarter update.
Why Goodman is an ASX 200 share to buy
According to the note, the broker was pleased with the company's performance during the first quarter of FY 2024. It said:
GMG's 1Q24 update highlighted continued strong operational results with 99% occupancy, rising LFL rental growth as they capture under-renting, and growing AUM and stable development production rate with elevated margins.
Citi was also pleased to learn more about the company's plans to expand its footprint in the data centre market. It adds:
The company provided more info on their data center pipeline which should provide some comfort to investors on the quantum (3.7GW power bank) as well as delivery timeline (7-10 years).
And while the property market is going through a tricky period, the broker believes Goodman is well-positioned to take full advantage. It said:
Moreover, GMG sees pricing dislocation in certain markets as a good opportunity to buy assets below replacement costs, and GMG have been well positioned to do this given low leverage.
All in all, Citi believes that the ASX 200 share has a positive outlook and trades on an attractive multiple based on its earnings growth potential. It concludes:
Demand supply dynamics remain tight in industrial and GMG's large development pipeline and solid track record, along with data center opportunities should drive the growth in earnings over the medium term. The stock trades at c.21x FY24e but with a consistent double-digit earnings growth outlook over the next 3-5 years, we see good value here.
Decent upside ahead
Citi currently has a buy rating and a $25.50 price target on Goodman's shares.
Based on its current share price of $22.40, this implies a potential upside of approximately 14% for investors over the next 12 months.