The Wesfarmers Ltd (ASX: WES) share price has started 2022 in a disappointing fashion.
Since the start of the year, the conglomerate's shares have fallen approximately 7%.
Is the Wesfarmers share price good value?
One leading broker that believes the Wesfarmers share price could be good value after its recent pullback is Morgans.
According to a note, the broker has upgraded the company's shares to an add rating with an improved price target of $60.80.
Based on the current Wesfarmers share price of $55.63, this implies potential upside of almost 9.5% over the next 12 months before dividends. If you include the $1.51 per share fully franked dividend the broker is forecasting in FY 2022, the potential return stretches to 12%.
What did Morgans say?
Morgans was pleased with Wesfarmers' first half trading update this week and notes that it was better than its analysts were expecting.
The broker said: "WES advised that 1H22 NPAT is expected to be between A$1,180-1,240m (above Morgans of A$1,037m but in line with consensus expectations) with Bunnings and WesCEF performing well while Kmart Group and Officeworks were impacted by COVID-related disruptions and costs."
In light of this and recent weakness in the Wesfarmers share price, the broker feels now could be a good time to buy this "high-quality company."
It concluded: "We continue to see WES as a high-quality company with its share price down 6% over the past month and 15% versus its peak of A$64.98 on 20 August 2021. While not cheap based on FY22 forecasts (30.3x PE and 2.7% yield), the stock looks more attractive on FY23 forecasts (26.7x PE and 3.1% yield). We expect the market will turn its focus to FY23 estimates over the coming months."
