The Endeavour Group Ltd (ASX: EDV) share price was out of form on Thursday.
The alcohol retailer's shares tumbled 3.5% to $7.61 following the release of its third quarter trading update.
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Is the Endeavour share price in the buy zone?
One leading broker that believes the weakness in the Endeavour share price as a buying opportunity is Goldman Sachs.
According to a note this morning, in response to its third quarter update, the broker has retained its conviction buy rating and lifted its price target to $8.30.
Based on the current Endeavour share price, this implies potential upside of 9.1% for investors over the next 12 months.
And with Goldman expecting a fully franked 2.5% dividend yield in FY 2022 and 3.1% in FY 2023, the total return on offer stretches to approximately 12%.
The broker commented: "We update our TP to A$8.30/sh (vs prior A$8.00/sh, implying 9.1% TP upside) to reflect EDV's 3Q22 sales update and a deep dive into the Hotels opportunity as the company begins to see accelerated recovery back to pre-COVID levels in 3Q22."
Why is Goldman bullish?
A couple of the main reasons that Goldman Sachs is bullish on the Endeavour share price are the company's digital capabilities and customer loyalty. The broker believes these leave it well-placed for growth in the future.
Goldman explained:
"We continue to be bullish on the digital consumer capabilities of EDV with 3Q22 Dan's members at 6.4m (>4m of which was active in last 6mths) and online penetration remaining at 9.6% (though lower towards end of quarter as reversion back to in store gathered pace).
We continue to believe that EDV is unrivaled in its capability to deliver a seamless omni-channel experience to consumers and can manage well through short-term cost volatilities with a less price-sensitive portfolio and high consumer loyalty. Retain Buy (on CL)."
