The Baby Bunting Group Ltd (ASX: BBN) share price was among the best performers on the All Ordinaries index on Tuesday.
The baby products retailer's shares ended the day with a gain of 4% to $5.50.
This latest gain means Baby Bunting's shares are now up 24% since this time last year.
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Why did the Baby Bunting share price storm higher today?
Investors were bidding Baby Bunting's shares higher on Tuesday after it was the subject of a bullish broker note out of Citi.
According to the note, the broker has upgraded the retailer's shares to a buy rating with an improved price target of $5.98.
Based on the current Baby Bunting share price, this implies potential upside of approximately 9% over the next 12 months.
And with Citi forecasting a 17 cents per share fully franked dividend in FY 2022, the potential return stretches to almost 12%.
What did the broker say?
Citi made the upgrade largely on valuation grounds. The broker notes that the Baby Bunting share price has pulled back meaningfully since the release of its full year results for FY 2021 in August.
It sees this as a buying opportunity. Particularly given its belief that the retailer is well-placed for growth. In addition, Citi is expecting a decent trading update at its annual general meeting in October.
Citi commented: "We upgrade to Buy as we now see the risk/reward tradeoff to be more favourable following the -12% share price decline since the FY21 result. The company's core growth strategies of rollout, exclusive/private label growth and supply chain efficiencies remain intact."
"Further, Baby Bunting is well placed to report a relatively stronger AGM trading update compared to most listed retail peers given the nondiscretionary nature of its products," the broker concluded.
