Endeavour Group Ltd (ASX: EDV) shares came under pressure again late last week.
On Friday, the ASX 200 stock tumbled into the red following news that the drinks giant's CEO, Steve Donohue, is stepping down from the role.
According to the release, after 30 years with the business, including more than six years as the Dan Murphy's owner's CEO, Donohue and the board determined that now is the right time for a new leader to take the company into its next phase of growth.
Donohue started as a summer casual in the second Dan Murphy's store in Alphington Victoria in 1994, before quickly rising through the ranks.
Image source: Getty Images
Time to buy this ASX 200 stock
Analysts at Goldman Sachs acknowledge that the news is disappointing but aren't concerned.
As a result, the broker believes the pullback has created a very attractive buying opportunity for investors.
Commenting on the exit, Goldman believes the ASX 200 stock won't struggle to find a new leader. It said:
Whilst the announcement of Mr Donohue's exit is earlier than expected, we believe that with a recently strengthened Board, and in particular with new Chairman Ari Mervis appointed in March 2024 who was formerly the Chairman of Accolade Wine and over 27 years tenure with SABMiller, including a decade as its APAC Regional MD, will be able to appoint a new leader who will be equipped to deal with a complex operating environment which is 1) challenged on the one hand with slowing volume consumption and gaming regulatory headwind; while 2) unlocking value for shareholders via reimaging its hotels business into a less gaming dependent social destination.
While today's announcement could be followed by some near-term volatility in the stock-price, we continue to believe that the company's core businesses are high quality (evidenced by Retail share gains and Hotels F&B margin improvement). The current share price implies that the Hotels business is trading on FY25 EV/EBIT of 2.9x (pre AASB16), excluding A$1B of freehold property assets.
Big returns
Goldman Sachs has responded to the news by reaffirming its buy rating and $6.20 price target on the ASX 200 stock.
Based on its current share price of $4.99, this implies potential upside of 24% for investors over the next 12 months.
In addition, its analysts are forecasting a 4.3% dividend yield in FY 2025 (and then 4.7% in FY 2026), which brings the total 12-month potential return to over 28%.
