Market selloff: Broker says the Goodman share price now has 65% upside potential

A male sharemarket analyst sits at his desk looking intently at his laptop with two other monitors next to him showing stock price movements

A male sharemarket analyst sits at his desk looking intently at his laptop with two other monitors next to him showing stock price movements

The Goodman Group (ASX: GMG) share price was caught up in the market selloff on Tuesday.

So much so, at one stage the integrated industrial property company’s shares dropped to a 52-week low of $17.21.

The Goodman share price ultimately finished the day with a 3.5% decline to $17.91.

Is the Goodman share price weakness a buying opportunity?

The good news for investors is that one leading broker believes the Goodman share price can bounce back materially from current levels.

According to a recent note out of Citi, its analysts have put a buy rating and $29.50 price target on the company’s shares.

This price target suggests that there is potential upside of 65% for investors over the next 12 months.

What did the broker say?

Citi was pleased with the company’s performance during the third quarter and believes there’s more to come. This is thanks to solid demand for industrial property, which it expects to underpin above-guidance growth.

GMG’s 3Q22 update highlights a continuation of strong conditions, which resulted in guidance for FY22 EPS growth being upgraded to 23% (from 20% previously). Like-for-like rental income, development WIP and AUM all increased, albeit with a FX headwind partially offsetting growth in AUM and WIP.

Similar to previous periods, we see FY22 guidance as conservative given strong FUM growth into 4Q22, off the back of development completions and rising asset values (as GMG’s book cap rates are softer than market). Moreover, despite fears, we see the growth outlook as being robust for FY23 as well given solid demand for industrial (which is driving market rental growth above longer-term averages) and ongoing investment demand, which should support asset value and AUM growth. We re-iterate Buy and see the -25% YTD share price decline as a good entry point.

The post Market selloff: Broker says the Goodman share price now has 65% upside potential appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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