The market has edged lower again on Thursday but that hasn't stopped the Wesfarmers Ltd (ASX: WES) share price from pushing higher.
In afternoon trade the conglomerate's shares are up over 1% to $32.33.
Why is the Wesfarmers share price on the rise today?
With no news out of the company, the catalyst for today's gain appears to be a broker note out of the Macquarie Group Ltd (ASX: MQG) equities desk.
According to the note the broker has retained its outperform rating and $36.51 price target on the conglomerate's shares after reviewing the impact that the cooling housing market could have on Wesfarmers following the demerger of the Coles Group Ltd (ASX: COL) supermarket business.
This price target implies potential upside of almost 13% over the next 12 months, excluding dividends.
Why is Macquarie bullish on Wesfarmers?
With the Bunnings business now accounting for an estimated 54% of the company's earnings, it is understandable why some investors would be concerned by the housing market downturn.
But Macquarie sees no reason to be concerned by it. It has pointed to Bunnings' long track record of market share gains, positive consumer confidence, low levels of unemployment, and cheap credit as reasons to be positive.
Overall, its analysts suspect that the market does not fully appreciate the resilience of the Bunnings business.
Should you invest?
Based on Macquarie's forecast for earnings per share of $1.74 in FY 2019, Wesfarmers' shares are currently trading at just over 18.5x forward earnings.
This compares favourably to the shares of rival Woolworths Group Ltd (ASX: WOW) which are currently changing hands at 22x estimated forward earnings.
All in all, I would have to agree with Macquarie that Wesfarmers is in the buy zone right now.
In addition to this, I also think the Coles share price looks attractive at current levels. Macquarie has a neutral rating and price target of $13.48 on the supermarket giant's shares. This is 11.5% higher than where its share price stands today.
