The Wesfarmers Ltd (ASX: WES) share price has risen in March. But could it keep going up in April 2022?
No one can truly know what a share price is going to do on any day, month or even year.
But analysts regularly like to update their thoughts on a business. Company updates can also change investor opinions.
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What could happen next for the Wesfarmers share price?
One of the latest ratings on Wesfarmers comes from the broker Citi. It is 'neutral' on Wesfarmers, with a price target of $50. That implies that the ASX retail share is expected to decline slightly.
The broker had a look at what the impacts of the federal budget might be, with a potential $8 billion increase for Aussie households to spend, which could help Wesfarmers.
One of the most positive brokers on Wesfarmers is Morgans. It rates Wesfarmers as a buy, with a price target of $58.50. That implies a potential rise of more than 10%.
Morgans noted that the FY22 half-year result were not as strong as the broker had been expecting, partly because of COVID-19 effects, which it believes will continue over the six months to 30 June 2022.
Half-year earnings wrap
The company reported that revenue fell 0.1% to $17.76 billion. Net profit after tax (NPAT) fell by 12.7% to $1.2 billion and operating cash flow sank 29.8% to $1.56 billion.
Wesfarmers said the first six months of FY22 were the most disrupted period for its businesses since the onset of COVID-19. There were store closures and trading restrictions. On top of that, operating costs and stock availability were impacted by ongoing supply chain disruptions and elevated team member "absenteeism".
Cash flow was also impacted by higher inventory, particularly in Kmart as a result of additional purchasing decisions to prioritise availability while COVID-related disruptions persist.
Outlook
When the ASX retail share released its FY22 half-year result, it said that overall economic conditions in Australia were favourable, supported by strong employment and high levels of accumulated household savings. The company continues to actively manage increasing inflationary pressure and will leverage its scale to mitigate the impact of rising costs.
The company said its retail businesses will increase their focus on price leadership and are "well positioned to continue to provide customers with great value on everyday products as rising cost-of-living pressures impact household budgets."
Retail trading conditions were subdued in January because of growing Omicron COVID-19 case numbers, impacting both customer traffic and labour availability, but trading momentum improved in February.
Wesfarmers continue to incur additional costs and experience stock availability impacts. It's expecting supply chain disruptions, elevated transport costs and constraints in domestic labour markets to continue in the second half of FY22.
Wesfarmers share price valuation
Citi thinks that the current Wesfarmers share price is valued at 25x FY22's estimated earnings.
However, Morgans thinks the Wesfarmers share price is valued at 27x FY22's estimated earnings.
