The Wesfarmers Ltd (ASX: WES) share price is back on form on Friday.
In late afternoon trade, the conglomerate's shares are up 2.5% to $49.94.
Where next for the Wesfarmers share price?
Opinion is divided on the Wesfarmers share price, with two leading brokers recently giving polar opposite recommendations.
For example, earlier this week, the team at Goldman Sachs reiterated its sell rating and $38.60 price target. This implies potential downside of almost 23% for investors over the next 12 months.
Goldman stated that its bearish view is predicated on "softening discretionary goods spend (-2% 2022-24e vs +5% FY19-22e) against increasing competition from online pureplays including Amazon."
The broker feels that this will lead to Wesfarmers' earnings coming in below consensus in FY 2023 and FY 2024.
[We] are -2.4% and -6.3% below consensus for FY23/24 EPS, specifically, we are well below consensus on Kmart group on rising competition and inventory disruptions as well as margin reversion post COVID. The company does note that they are not yet seeing material interruptions as they were able to divert away from Shanghai Port earlier and also a higher level of local inventory well insulated operations.
Who is bullish?
The team at Morgans don't appear to agree with Goldman's view on the Wesfarmers share price.
In fact, earlier this month, the broker named it as one of its best ideas for the month of May.
WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks. The company is run by a highly regarded management team and the balance sheet is healthy. While COVID-related staff shortages are a challenge, the core Bunnings division (>60% of group EBIT) remains a solid performer as consumers continue to invest in their homes. We see the recent pullback in the share price as a good entry point for longer term investors.
Morgans has an add rating and $58.50 price target on the company's shares. Based on the current Wesfarmers share price, this suggests potential upside of 17% for investors.
