The Wesfarmers Ltd (ASX: WES) share price was out of form again on Tuesday.
In late trade, the conglomerate's shares are down 1% to $52.55.
This means the Wesfarmers share price is now down 11% since the start of the year and 22% from its 52-week high.
Is the Wesfarmers share price in the buy zone?
While the weakness in the Wesfarmers share price is disappointing for shareholders, it could be a buying opportunity for non-shareholders.
That's the view of the team at Morgans, which recently upgraded the company's shares to an add rating with an improved price target of $60.80.
Based on the current Wesfarmers share price, this implies potential upside of almost 16% over the next 12 months.
In addition, the broker is forecasting a fully franked $1.51 per share dividend in FY 2022. This represents a 2.9% yield, which lifts the total potential return to over 18.5%.
What is the broker saying?
Morgans sees a lot of value in the Wesfarmers share price following recent weakness.
At the time of its upgrade, the broker commented: "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."
"We see WES as a high-quality company with a healthy balance sheet and well-regarded management team. Despite short term challenges related to COVID, we think the recent pullback in the share price provides a good entry point for longer-term investors," it added.
