Could the Wesfarmers share price have already bottomed?

Could Wesfarmers shares be in the buy zone today?

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Key points

  • Wesfarmers is one of the oldest and most popular blue-chips on the ASX 
  • But the company has taken a steep fall in recent months 
  • But could this mean Wesfarmers is a buy today? Let's see what the brokers reckon... 

It’s been a rather unusual year for the Wesfarmers Ltd (ASX: WES) share price. Wesfarmers shares have long enjoyed a strong reputation on the ASX. This could possibly be because of its long history as an ASX blue-chip, dividend-paying company. Or perhaps the fact that Wesfarmers is one of the most diversified businesses on the ASX, owning everything from top retailers like OfficeWorks and Bunnings to mining companies and a clothing line.

Whatever the reasons, Wesfarmers is a popular ASX 200 share. and one that rarely drops in value significantly outside major market crashes. Or at least that was true until August last year. That was when Wesfarmers hit its reigning all-time high of $67.20 a share.

But today, Wesfarmers shares are going for just $49.80 each. That’s a good 25% or so below that all-time high we saw last August. The company is also down a hefty 17% in 2022 so far.

So could Wesfarmers shares have further to fall? Or is this a buying opportunity for this ASX 200 blue-chip?

Wesfarmers share price: Is it a buy today?

Well, prominent brokers are mixed in their views on Wesfarmers shares today.

As my Fool colleague James covered on the weekend, broker Goldman Sachs has recently retained a sell rating on Wesfarmers shares. This broker reckons Wesfarmers could be heading to $38.60 over the next 12 months – a potential downside of more than 20%. Goldman reckons Wesfarmers will struggle with its earnings over the next few years, largely as a result of its Kmart brand, as well as lower margins.

However, another broker Morgans disagrees. It recently slapped an add rating on Wesfarmers, with a 12-month price target of $58.50. If that were to be the case, it would mean a 17% upside from where the shares stand today. Morgans described Wesfarmers as possessing “one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks”. It also added that “the company is run by a highly regarded management team and the balance sheet is healthy”.

Morgans sees the recent weakness we have seen in Wesfarmers shares as “a good entry point for longer term investors”.

Only time will tell which ASX broker proves to be the oracle when it comes to Wesfarmers shares.

At the current Wesfarmers share price, this ASX 200 blue-chip has a market capitalisation of $56.44 billion, with a dividend yield of 3.41%.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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