Cedar Woods Properties Limited (ASX: CWP) shares have been on form over the past 12 months.
During this time, the ASX property stock has risen over 26%.
This leaves the property developer's shares trading within a whisker of its 52-week high.
But if you thought the gains were over, think again! That's because analysts at Bell Potter believe that Cedar Woods shares could generate big returns over the next 12 months.
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What is the broker saying about this ASX stock?
According to a note released this morning, the broker believes that Cedar Woods is in an attractive position in the cycle. It said:
In this note we highlight CWP's attractive position in the cycle, which we believe is not reflected in the current share price (-7.4% vs. XPJ m/m). We discuss why FY25 guidance is more than achievable, as well as why we think CWP can continue to scale the business and maintain earnings growth in future years.
Speaking of its earnings guidance, Bell Potter highlights that the ASX stock is guiding to 10% profit growth this year. It is also confident the company will outperform consensus expectations. The broker adds:
CWP have a track record of conservative guidance. Present guidance (10% NPAT growth) marks the first time that current management (since 2017) have issued an earnings target for the full year ahead. We think this reflects confidence around future earnings, underscored by record presales ($559m) to settle in FY25&26. We forecast 11% EPS growth (vs consensus 8%).
Bell Potter also notes that it has confidence in the company's long term outlook thanks to its acquisition strategy. It said:
Increased long-term confidence – CWP has demonstrated a disciplined acquisition strategy over time. We believe the strategy is repeatable (as shown in 2H24 with 4 acquisitions) and the scalability of earnings is improving via 2 recently announced capital partnerships (QIC & TGRE).
Time to buy
In light of the above, the broker has retained its buy rating on the ASX stock with an improved price target of $7.15 (from $6.50).
Based on its current share price of $5.60, this implies potential upside of almost 28% for investors over the next 12 months.
In addition, it is forecasting fully franked dividend yields of 4.8% in FY 2025 and then 5.5% in FY 2026 and FY 2027.
If we add its dividend into the equation, this brings the total potential 12-month return to approximately 32.5%. The broker concludes:
CWP have a strong outlook with record presales, strong demand / runway in key markets, a diverse pipeline of well acquired projects, coupled with the group's conservative track record and decision to reintroduce guidance. We adjust FY25-27 EPS estimates by +0.6% to +1.2% after updating expectations at key projects and reducing our WACC risk free rate to 4%. The net result is a 10% increase in the price target to $7.15.
