The Treasury Wine Estates Ltd (ASX: TWE) share price is pushing higher on Thursday.
In morning trade, the wine giant's shares are up a decent 2.5% to $12.00.
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Why is the Treasury Wine share price pushing higher?
The catalyst for this rise has been the release of a first quarter update from the Penfolds owner ahead of its annual general meeting today.
According to the release, the company's luxury wine-led focus is driving top-line performance, with double-digit organic group net sales revenue (NSR) growth delivered in the first quarter over the prior corresponding period.
Management notes that Penfolds' "momentum remains strong", led by Asia and Australia. Whereas in China, its performance is in line with expectations, including through the Mid-Autumn Festival period. First quarter customer re-ordering and depletions are tracking well to plan on the Bins & Icons portfolio.
In light of this, Treasury Wine continues to expect low double-digit EBITS growth for Penfolds in FY 2025.
Over in the Americas, management notes that after realigning distributor arrangements through the first quarter, the Treasury Americas Luxury portfolio performance is expected to accelerate from second quarter for the key holiday selling period.
Pleasingly, the remainder of the company's global portfolio is performing to expectations, with NSR in line with the prior corresponding period.
Looking ahead, Treasury Wine expects its FY 2025 top-line growth to be driven by continued strong momentum across its Luxury brand portfolio. It continues to expect this to underpin FY 2025 EBITS to be in the range of $780 million and $810 million.
This will be an 18.5% to 23.1% increase on the EBITS of $658.1 million it reported in FY 2024.
Should you invest?
Goldman Sachs is very positive on Treasury Wine and sees significant value in its shares at current levels.
And while it has not yet had time to reflect on this update, with the company's guidance being reaffirmed today, it seems quite likely that not a lot will change with its recommendation once it does.
Earlier this week, the broker reaffirmed its buy rating and $15.20 price target on the company's shares. Based on the current Treasury Wine share price, this represents potential upside of 27% over the next 12 months.
In addition, the broker estimates that its shares will provide investors with a dividend yield in the region of 3% in FY 2025. This stretches the total potential 12 month return to approximately 30%.
