ASX 200 share Coles Group Ltd (ASX: COL) has spent the year in the green. It has surged 17% so far in 2024 and is currently swapping hands at $18.89 apiece.
Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is up less than 6% this year.
With this outperformance, investors might be wondering whether the supermarket giant still offers value or if the ASX 200 share is running out of steam.
Let's see what the experts think.
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ASX 200 share has room to grow: Analysts
According to leading brokers, Coles shares may still have upside potential.
Citi analysts recently maintained their buy rating on the ASX 200 share, setting a price target of $21 apiece. This suggests an 11% increase from the current price.
Citi also highlights Coles as a solid dividend stock, forecasting fully franked dividends of 73 cents per share in FY25 and 85.5 cents per share in FY26.
If Coles delivers on this, it would produce yields of 3.9% and 4.5%, respectively.
Macquarie is also bullish on Coles, retaining its buy rating and lifting its price target to $20.20 in a recent note.
The broker was impressed with Coles' FY24 performance, particularly its margins, which exceeded expectations.
Macquarie believes that Coles' cost savings initiatives place it in a strong position for continued growth in FY25.
Meanwhile, UBS, which holds a buy rating with a price target of $19.50, sees Coles' steady dividend growth and strong fundamentals as reasons to remain confident in the stock.
But the verdict isn't evenly split. According to CommSec, consensus rates the ASX 200 share a hold.
This is made from five buys, nine hold ratings and two sell ratings.
So even though five brokers are bullish, the majority of analysts covering the stock rate it either as a hold or sell. As such, only around 30% of brokers covering Coles are bullish right now.
Goldman Sachs is one of the holds. In response to Coles' FY24 earnings, it reiterated its stance with an $18 price target.
Reflecting the [FY24 earnings], we tweak our FY25/26/27e group sales by -1% to 0% and EBIT by -2% to +3% respectively.
Our new TP is A$18.00/sh (prev A$16.70/sh) largely due to an increase in DCF on longer term Food margins and lower capex, implying -1% TSR. COL is trading at FY25 P/E of 24x vs LT average of 21x. Remain Neutral.
Is Coles still a buy?
Coles has long been viewed as a defensive ASX 200 share, benefiting from stable, recession-proof earnings.
The company's large market share, large store network, and ability to pass on costs to consumers could make it a compelling choice for long-term investors.
And following its performance in 2024, some brokers remain optimistic about Coles' prospects. According to them, it is a buy.
But the debate is balanced by the fact that more brokers are neutral on the ASX 200 share than they are bullish. If you ask this crowd, they'll likely say to hold off on doing anything with Coles right now.
This could be a risk going forward – or it could be a catalyst if Coles surprises the crowd. Time will tell.
