Broker gives its verdict on the Wesfarmers (ASX:WES) share price

Is it too late to buy Wesfarmers’ shares?

| More on:
watch

Image source: Getty Images

The Wesfarmers Ltd (ASX: WES) share price is edging higher on Monday afternoon.

At the time of writing, the conglomerate’s shares are up 0.3% to $57.95.

This means Wesfarmers’ shares are now up a decent 12.5% since the start of the year.

Is the Wesfarmers share price still good value?

Unfortunately, one leading broker believes the Wesfarmers share price could have peaked for the time being.

According to a note out of Citi from last week, its analysts have retained their sell rating but lifted their price target slightly to $49.00.

Based on the current Wesfarmers share price, this implies potential downside of approximately 15.5% over the next 12 months.

What did the broker say?

While Citi notes that Wesfarmers delivered a result in line with its expectations in FY 2021, it has concerns about the year ahead. This is due to the company cycling a strong sales period and facing lengthy COVID-related store closures.

The broker commented: “Wesfarmers delivered an in line result, reporting $2,421 million in underlying NPAT for FY21. Store closures and cycling of a strong sales base presents challenges in FY22e.”

In addition, Citi highlights that Wesfarmers’ retail businesses are facing a number of headwinds.

It explained: “The result featured many topics familiar to retailers: supply-chain disruptions, rising freight and commodity costs, transition to online, and increasing investment in digital and automation.”

And while it was pleased with its capital return announcement, it simply isn’t enough for a more positive rating due to the current Wesfarmers share price valuation.

Citi concluded: “The company announced a $2.3 billion capital return program. We upgrade earnings and Target Price to $49.00 on better-than-expected result from Kmart Group but maintain Sell on valuation grounds.”

Should you invest $1,000 in Wesfarmers right now?

Before you consider Wesfarmers, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Wesfarmers wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

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 owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

a group of people gathered around a laptop computer with various expressions of interest, concern and surpise on their faces. All are wearing spectacles.
Broker Notes

Broker says Life360 (ASX:360) share price has ~80% upside

The Life360 Inc (ASX: 360) share price was one of the best performers on the Australian share market in 2021. …

Read more »

best asx shares represented by best in show ribbon
Broker Notes

3 ‘champion stocks’ for ASX investors in 2022

If you’re a fan of buy and hold investing, then you may want to look at the “champion stocks” listed …

Read more »

a group of stockbrokers sit in a room with a computer and writing on a wall in chalk indicating calculations and graphs while discussing something on the computer screen.
Broker Notes

Here’s what 67% of brokers think of the current IAG (ASX:IAG) share price

Key points The IAG share price traded up today IAG has made a solid start to the year having rallied …

Read more »

A female financial services professional with a manicured black afro hairstyle turns an ipad screen to show a client across the table a set of ASX shares figures in graph format
Bank Shares

Goldman tips Bank of Queensland (ASX:BOQ) share price to rise 25%

If you’re interested in gaining exposure to the banking sector, then it could be worth considering Bank of Queensland Limited …

Read more »

surprised asx investor appearing incredulous at hearing asx share price
Broker Notes

Top broker sees 43% upside for the Westpac (ASX:WBC) share price

Key points The Westpac share price is down 24% from its highs Morgans believes this has created a buying opportunity …

Read more »

an arrow with sparks shoots up
Consumer Staples & Discretionary Shares

Why is the Dusk (ASX:DSK) share price firing 15% higher today?

Key points Dusk shares are bouncing off a 3-month low today. Shares are soaring 15% into the green at the …

Read more »

Green keyboard button saying buy stock
Broker Notes

Brokers name 3 ASX shares to buy today

It has been another busy week for Australia’s top brokers. This has led to the release of a large number …

Read more »

ASX miners crash opportunity broker buy asx shares represented by investor throwing hands up towards icons of buy and sell broker upgrade buy
Broker Notes

Time to sell? Macquarie just downgraded these 3 ASX shares from buys

Key points Macquarie comes out with a list of downgrades today The 3 ASX shares are all concentrated in resources …

Read more »