The Goodman Group (ASX: GMG) share price has been in fine form this year.
Since the start of 2023, the ASX 200 industrial property stock has risen a sizeable 15.5%.
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Can this ASX 200 stock keep rising?
The good news for investors is that one leading broker doesn't believe it is too late to jump on the Goodman train.
A recent note out of Citi reveals that its analysts have retained their buy rating with an improved price target of $24.30.
So, with this ASX 200 stock currently trading at $20.04, this still implies potential upside of 21% for investors over the next 12 month despite its stellar gains this year.
Why is Citi raving about Goodman?
Citi has become even more positive on Goodman shares following its recent quarterly update. The broker notes that this update demonstrates that industrial property continues to be the bright spot in real estate.
And while its updated guidance is still a touch behind the broker's estimate, it is worth remembering that Goodman is usually conservative with these things. Citi commented:
Along with the 3Q23 update, GMG upgraded FY23 EPS guidance to 15% EPS growth from 13.5%, which was almost in-line with consensus but slightly below our previous estimate. The update highlighted ongoing tailwinds for industrial with strong market rent growth improving the future rental upside on GMG's book. Record low vacancy has driven ongoing development demand resulting in a strong development workbook with $13bn in WIP, with near-term growth in developments from less time taken to develop (which will boost annual earnings).
Looking ahead, the broker believes this ASX 200 stock is well-placed for more of the same in the coming years. In light of this and its attractive valuation, the broker feels Goodman is a top buy right now. It concludes:
We see potential for GMG to generate consistent high-single to low-double digit earnings growth over the medium term driven by rental upside and longer term development projects, which will add to management and development earnings. The stock currently trades at c. 19x FY24e, below global industrial peers, despite having higher earnings growth and lower leverage. We therefore see upside to the share price and retain Buy.
