The JB Hi-Fi Limited (ASX: JBH) share price was a strong performer on Thursday.
The retail giant's shares ended the day with a gain of 3% to $45.52.
Image source: Getty Images
Why did the JB Hi-Fi share price charge higher?
As well as benefiting from a strong day by the S&P/ASX 200 Index (ASX: XJO), JB Hi-Fi's shares were given a boost by a bullish broker note.
According to the note out of Citi, its analysts have upgraded the retailer's shares to a buy rating from neutral.
And while the broker has trimmed its price target slightly from $55.00 to $53.00, this still implies material upside of 16% for the JB Hi-Fi share price over the next 12 months.
And that doesn't include the generous dividend the broker is forecasting in FY 2022. Citi has pencilled in a fully franked dividend per share of $2.28.
Based on the current JB Hi-Fi share price, this will mean a 4.3% yield, which extends the total potential return to over 20%.
What did the broker say?
Citi made the move on valuation grounds. It believes the recent pullback by JB Hi-Fi's shares has been overdone and created a buying opportunity.
The broker points out that the company's shares are changing hands at a discount of 40% to the ASX 200 index excluding resources shares. This is significantly greater than historical multiples.
Citi isn't alone with this view. The team at Credit Suisse also believe the company's shares are trading at an attractive level.
According to a note from earlier this month, the broker has an outperform rating and $53.66. This suggests there's almost 18% upside for the JB Hi-Fi share price from here.
This could make it one to consider if you're looking for options in the retail sector.
