The Wesfarmers Ltd (ASX: WES) share price is edging ever so slightly higher on Monday.
That's despite the ASX 200 index taking a tumble this afternoon.
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Why is the Wesfarmers share price edging higher?
Today's gain may have be a delayed reaction to the release of a bullish broker note out of Morgans on Friday.
According to the note, the broker has retained its add rating with a price target of $58.40.
Based on the current Wesfarmers share price of $47.20, this implies potential upside of 24% for investors over the next 12 months.
And with Morgans forecasting fully franked dividends of $1.65 per share in FY 2022 and $1.81 per share in FY 2023, the total 12-month return stretches to over 27%.
What did the broker say?
Morgans appears to have come away from Wesfarmers' strategy update last week feeling confident in its outlook and ability to navigate the tough retail environment. It commented:
Wesfarmers' strategy day provided insights into the growth opportunities available for each business division and the strategy going forward.
With cost-of-living pressures increasing, management was confident in WES's ability to navigate through a more cautious consumer environment given the retail businesses offer a strong value proposition underpinned by scale benefits, product innovation and supply chain efficiencies.
In addition, the broker sees positives from the new OneDigital platform. It said:
There was a big focus on data and digital with information provided on the newly established OneDigital platform that will provide the retail businesses with broader insights than could be achieved on a standalone basis.
We think OneDigital could become a powerful tool for WES given the company's broad sector exposures and will tie in well with insights from flybuys.
All in all, Morgans remains very positive on Wesfarmers and sees it as a top buy and hold option for investors. It concludes:
We continue to see WES as a long-term, core portfolio holding with a strong mix of businesses, highly regarded management team and a healthy balance sheet.
