Woolworths Group Ltd (ASX: WOW) shares gained 1.2% on Thursday. That was the day the S&P/ASX 200 Index (ASX: XJO) supermarket giant released its third-quarter sales update.

Shares closed up another 2.32% on Friday, ending the week trading for $32.68 apiece.

That sees Woolworths stock up 7.0% over 12 months, not including the $1.36 a share in fully franked dividends the company paid out over the full year.

If we add those back in, then the accumulated value of Woolworths shares has gained 11.4% over a year.

That's an impressive turnaround for the big Aussie supermarket, considering that shares closed at multi-year lows of $27.75 on 17 March.

Investors who bought the dip six weeks ago will be sitting on gains of almost 18% today.

But with those gains already in the bag, just how much upside do the analysts at Macquarie Group Ltd (ASX: MQG) expect in the year ahead?

What is Macquarie forecasting for Woolworths shares?

Following Woolies' quarterly update on Thursday, Macquarie retained its outperformance rating on Woolworths shares.

For the three months to 6 April, the supermarket achieved a 3.2% year-on-year increase in sales to $17.3 billion. Woolworths' Australian Food division delivered $13.05 billion in sales, up 3.6% from the prior corresponding quarter.

Macquarie noted:

We expect earnings to bottom in FY25E, with significant growth in FY26E as the group cycles a disrupted year, and cost savings to benefit FY27E+.

The broker said Woolworths shares are still in the "early days" of recovery, which it sees as a long-term story.

According to the analysts at Macquarie:

While there was limited evidence of a turnaround in customer perception and sales, we remain attracted to long-term upside driven by: i) Recovering momentum in the key AU Food segment; ii) further detail on cost savings; and iii) rising importance of retail media.

One negative from this week's quarterly update was the performance of Big W.

Macquarie pointed out that, "Big W 2H25 guidance was reduced to a loss before interest and tax of $70m (prior: -$40m), mainly driven by the impact of clearance sales in Clothing."

However, the broker added:

The [Big W] segment continues to underperform the overall business, and as a result we expect an ongoing review as new management reassesses the portfolio. Given soft performance, we expect any material actions to improve returns and/or re-allocate capital will be taken positively.

Macquarie has a 12-month target price on Woolworths shares of $33.60. That represents a potential upside of 3.0% from Friday's close. And it doesn't include those upcoming dividends.