The Woolworths Group Ltd (ASX: WOW) share price has come under significant selling pressure this week.
Since the start of the week, the retail conglomerate's shares are down 8.5% to $37.32.
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Why is the Woolworths share price sinking this week?
Investors have been selling down the Woolworths share price this week following the release of a trading update.
That update revealed that the company's earnings have been impacted by significant costs relating to COVID-19.
Investors may now be wondering whether the pullback in the Woolworths share price is a buying opportunity? Well, one leading broker has given its verdict.
What did the broker say?
According to a note out of Morgans, its analysts don't believe the Woolworths share price has fallen enough to make it a buy.
This morning the broker has retained its hold rating and trimmed its price target on the company's shares to $36.65. This is almost 2% lower than where its shares are trading at present.
Morgans commented: "Woolworths' trading update overall was disappointing, with slightly better than expected Australian Food sales growth in 1H22 more than offset by significantly higher COVID costs, which had a negative impact on margins and earnings."
"On the back of the trading update we decrease FY22F EBIT by 7% to A$2,693m . Our FY23 and FY24 earnings forecasts remain broadly unchanged assuming a return to more normal operating conditions. The key unknown remains further widespread COVID disruptions."
"Our target price falls to $36.65 and we maintain our Hold rating. We think the 7.7% fall in the share price today reflects the disappointing trading update and WOW's elevated trading multiples, notwithstanding long term fundamentals remaining sound," it concluded.
All in all, the broker appears to believe investors ought to wait for further weakness in the Woolworths share price before considering an investment.
