Key Points
- Woolworths shares down 8% in 2022
- Supply chain issues and weak market sentiment dragging down the Woolworths share price
- COVID-19 cases dwindling, with possible end in sight for product limits
What a chaotic time it has been for the Woolworths Group Ltd (ASX: WOW) share price.
The supermarket giant has been battling supply chain challenges following the recent COVID-19 outbreak.
Furthermore, macroenvironmental factors have weighed down overall investor sentiment such as the likely interest rate hikes to curb rising inflation.
At Friday's market close, Woolworths shares ended the day at $35.05 apiece, up 0.86%. However, when looking at year to date, its shares are down 7.79%.
What are Woolworths' current woes?
With the ASX slumping since the start of the year, investors may be wondering if Woolworths shares can recover?
The rapid spread of COVID-19 forced thousands of staff to isolate themselves at home whilst waiting for their COVID-19 test results. This created a huge disruption to Woolworths' supply chain as affected staff were obeying stay-at-home orders.
At one point, a reported 35% of its distribution centres workers were in self-quarantine.
Notably, Woolworths shelves have been laid bare in stores across the country as a result of the staff shortages. This resulted in about 50% of delayed deliveries for major product lines.
While the supply issues have continued to impact stores, product limits have been re-introduced to prevent panic buying.
The good news is that the latest COVID-19 figures are showing that we have already hit the Omicron peak.
The number of cases is on a steady decline with both New South Wales and Victoria recording a significant drop. Each of the southern states are at the lowest number of new cases since late December.
This means that it's only a matter of time before the supermarket shelves are stacked back to full again and product limits are dropped.
Is this a buying opportunity?
A number of brokers believe that the Woolworths share price is attractively valued.
Multinational investment bank, Macquarie slashed its 12-month price target by 3.6% to $40 for Woolworths shares. This implies an upside of around 14.1% based on the current share price.
In addition, Citi lowered its assessment on Woolworths shares by 1.3% to $39. Its analysts clearly believe that there is still significant value in the company and that a recovery is inevitable. This represents a potential upside of 11.2% from where it trades today.
Woolworths share price snapshot
It's been a rollercoaster ride for Woolworths shares over the last 12 months, posting a small loss of around 3%.
Woolworths has a price-to-earnings (P/E) ratio of 35.26 and commands a market capitalisation of roughly $42.48 billion.
