The past three weeks have been good to the Treasury Wine Estates Ltd (ASX: TWE) share price. And the fun might have only just begun. One top broker is tipping the winemaker and distributer to gain another 18%.
At the time of writing, the Treasury Wine share price is $11.74. That's 5.86% higher than it was three weeks ago.
For context, the S&P/ASX 200 Index (ASX: XJO) has risen 2.1% over that time. Meanwhile, the company's home sector – the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) – has dumped 4.6%.
Let's take a look at why Treasury Wine has garnered this broker's eye.
Broker tips Treasury Wine share price to gain 18%
The Treasury Wine share price could have some seriously bright days ahead if Morgans' predictions come true.
The broker was impressed by the company's latest half-year results, released in February.
Its earnings before interest, tax, SGARA, and material items (EBITS) slipped 6.7% in the half. But that was seemingly better than expected considering the headwinds faced by the company.
Its most renowned brand, Penfolds, saw a revenue drop of 16.3%, while its EBITS fell 19%. The fall was generally expected considering the brand struggled in the Chinese market due to tariffs.
Additionally, Treasury Wine's management – which Morgans also likes – flagged a shift in the company's mindset.
Treasury Wine CEO Tim Ford said the company is moving from "recovery and restructuring" to a new phase of "growth and innovation".
"We have great confidence that by leveraging the unique strengths of our business … we are well placed to capitalise on the significant opportunities," Ford said.
Morgans is bullish on the company's plans for the future, saying:
The foundations are now in place for [Treasury Wine] to deliver strong double-digit growth from [the second half of financial year 2022] over the next few years.
The broker slapped a price target of $13.93 on Treasury Wine shares with an add rating.
