Coles Group Ltd (ASX: COL) shares have been outperforming this year.
So much so, since the end of 2024, the supermarket giant's shares have risen over 25%.
This compares favourably to an 8% gain by the S&P/ASX 200 index over the same period.
What's next for this blue chip? Let's see what one leading broker is saying.
What is the broker saying?
The team at Ord Minnett has been running the rule over the supermarket operator following its FY 2025 results.
It was pleased the results, highlighting that they were largely in line with expectations. It was also happy to see that the company's sales growth has accelerated early in FY 2026. The broker said:
Coles reported FY25 earnings and final dividend largely in line with Ord Minnett and market expectations, buoyed by lower-than expected implementation costs at its automated fulfilment and distribution centres. Looking ahead, the second-largest supermarket chain said a strong finish to FY25 – sales growth in the June quarter was 4.3% – had extended into the first quarter of FY26, with sales growth accelerating to 4.9% in the first eight weeks of the period despite the impact of reduced tobacco sales due to the proliferation of illegal tobacco.
Are Coles shares a buy?
Ord Minnett remains very positive on Coles. However, due to its recent rally, the potential upside on offer with Coles shares is now on the limited side.
According to the note, the broker has an accumulate rating and $24.00 price target on its shares. This is only a touch below its current share price.
Commenting on the recommendation, its analysts said:
We expect further gains to come from the automation initiatives when their implementation is complete, but on the downside, restructuring expenses and weak trading in its liquor division will weigh on group earnings. Coles has been through a period of investment and rebuilding that is now paying off and appears to have fended off the intrusion of non-traditional retailers, such as Bunnings, Amazon and Chemist Warehouse, into some of its market segments. It is also outperforming arch-rival Woolworths comfortably. We have a positive view on Coles' prospects and maintain our Accumulate recommendation.
Though, it is worth noting that there are other brokers out there that have higher valuations.
For example, Macquarie has an outperform rating and $25.40 price target. This implies potential upside of approximately 7% and with dividends the total return is closer to 10%.
