Treasury Wine Estates Ltd (ASX: TWE) shares have retreated from their October highs and are down alomost 2% in the past week.
Shares in the wine producer slipped despite management last week confirming its outlook for the business to produce $780 million to $810 million in pre-tax income for FY25.
Some analysts see the dip as a buying opportunity. Is now the right time to pour some Treasury Wine shares into our investment portfolios? Let's see what the experts are saying.
Several analysts are backing Treasury Wine shares, pointing to potential growth and recovery in key markets.
Citi is the most recent broker to upgrade Treasury Wine to a buy. It raised its rating from neutral but maintained its price target of $12.97 per share.
Analyst Sam Teeger explained the reasoning behind the move, as reported in The Australian:
We have made no changes to our earnings forecasts but given the share price fall, we have upgraded the stock to a buy.
We are incrementally more positive on the recent improvement in DAOU data combined with last week's better than expected outlook for the brand, and the China recovery which is arguably exceeding expectations given the broader macro weakness.
The outlook for Treasury Wine's China recovery is one notable takeout from Citi's analysis, despite broader economic concerns in the region.
However, Citi did caution about risks such as potential impacts from parallel importing and shifts in consumer sentiment, especially concerning the 19 Crimes brand.
Key risks which need to be closely monitored include future China customer orders being adversely impacted by parallel importing and consumer sentiment as well as underperformance of 19 Crimes.
Citi joins a list of brokers who believe the wine company is set for a period of earnings growth that could positively affect its share price.
According to CommSec, consensus rates the stock a buy. Analysts project 61 cents per share in earnings from Treasury Wine Estates in FY25, stretching to 72 cents per share the year after.
Goldman Sachs is particularly bullish on Treasury Wine shares, retaining its buy rating and a higher price target of $15.20 in a recent note.
The broker praised the company's strong start to FY25, highlighting double-digit growth in organic group net sales revenue (NSR) during the first quarter.
According to Goldman, the returning Australian-sourced Penfolds brand has received a "positive reception", particularly in Asia.
This comes after China lifted import tariffs placed on Australian wine a few years back. With this sales channel now reopened, Goldman says the company is well-positioned to capitalise on this.
With positive updates from analysts and a focus on luxury wine driving strong revenue growth, Treasury Wine shares could offer an attractive opportunity for investors looking to capitalise on the recent dip.
The key risks, according to Citi, centre on the China sales outlook along with any performance drag of the 19 Crimes brand.
Time will tell what eventuates. Trading at $11.83 at the time of writing, the Treasury Wine share price is up 9.5% this year to date.
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