It certainly has been a volatile 12 months for the Treasury Wine Estates Ltd (ASX: TWE) share price.
Although the wine company's shares are up 3% over the period, this only tells half the story. In November the Treasury Wine share price was down as much as 34% from where it trades today after China first took aim at the Australian wine sector.
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Can the Treasury Wine share price go higher?
According to a note out of Goldman Sachs, its analysts believe the Treasury Wine share price is fully valued now.
This morning the broker retained its neutral rating and $10.60 price target on the company's shares.
Based on the latest Treasury Wine share price, this price target implies potential downside of ~11% over the next 12 months.
What did Goldman say?
Goldman has been looking into market trends and, while it has seen some encouraging signs in May, it isn't enough for a more positive rating.
Goldman commented: "Monthly data trends are supportive in the US, with encouraging comments out of recent global peer earnings releases. Chinese data continues to fall off, and in some cases becoming immaterial. TWE took market share in May with a decline of 5.3% against a market down 14%, with both volume and price driving the outperformance."
"Industry feedback confirms the strong off premise sales; however, the recovery in on premise, particularly in North America, is an emerging trend which could prove beneficial to TWE, given its now reduced mix of commercial ranges and range of premium Californian brands," the broker added.
Goldman also notes that wine companies are finding markets to export to after being hit with tariffs in China.
It explained: "Chinese imports were down 8.6% in April, although largely driven by plummeting imports from Australia, down -94.8% yoy on a value basis. Despite this, Australian alcohol exports are showing greater resilience, suggesting alternate market focus from industry."
What would make Goldman more positive?
While Goldman doesn't see value in the Treasury Wine share price at the current level, that could change in the future.
It advised that it would become more positive if the Australian dollar weakened, there was a faster recovery of trading in its US operations, improvements in the China tariff situation, and evidence of tangible progress on its proposed demerger of Penfolds.
But until then, it will be holding firm with its neutral rating on the Treasury Wine share price.
