Wesfarmers Ltd (ASX: WES) shares have had a cracking year so far in 2024. As can be seen on the chart below, the consumer stock has surged by around 20% year to date. By comparison, the ASX 200 has gained a much more modest 3.6%.
But where is the Wesfarmers share price heading next?
Wesfarmers may not be a household name outside of investing circles, but the businesses it owns certainly are! The company operates some of the most high-profile and well-regarded retailers in Australia including Kmart, Bunnings, Target, Priceline, and Officeworks.
Overall, Wesfarmers' businesses have been performing well, despite the current backdrop of sticky inflation and the surging cost of living. In particular, Kmart and Bunnings have managed to keep growing sales because of their focus on providing good-value products.
With Wesfarmers shares currently trading at the upper end of their 52-week range, let's take a look at what brokers think.
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Price targets on Wesfarmers shares
A share price target is the value analysts think the stock could be trading at in 12 months.
In a note released early this month, top broker UBS stated a price target of $66 on Wesfarmers shares, implying the stock could fall by more than 3% from where it's currently trading.
UBS has a neutral rating on the ASX 200 retail share, meaning it doesn't believe the business is worth buying or selling at this stage. Despite the neutral rating, UBS says there are attractive growth options across Bunnings, Kmart, and Officeworks for Wesfarmers.
Looking at Bunnings, the broker highlights "new and expanded product ranges (eg. pet, rural, auto), improving use of retail space, improved omni-channel customer experience, improved commercial offering" and an improved supply chain as growth drivers. UBS also says there are external "supports" for Bunnings, including population growth and the age and supply of housing (compared to the strong demand).
Regarding Wesfarmers' other major profit generator, Kmart, UBS points to the fact the business is leveraging growth as customers "seek value via greater frequency and category participation".
The range of products from Kmart-owned brand Anko is also seeing benefits from increased scale, enabling better products at lower prices. According to UBS, a broadening of existing Kmart ranges can "recruit" more customers, while Anko's international wholesale and retail (small format) growth provides "long-term optionality".
According to Commsec, broker Goldman Sachs is also neutral on Wesfarmers shares, though its price target is more optimistic than UBS's. Goldman maintains a price target of $68.80, 4% higher than the UBS price target and 0.85% higher than the current Wesfarmers share price.
Foolish takeaway
Based on Wesfarmers' current valuation, price targets from UBS and Goldman Sachs are not suggesting a huge rise for the ASX 200 consumer stock over the next 12 months.
Looking further afield at analyst opinions collated by Commsec on the retail giant, there are currently 17 ratings. Of those 17, five are sells, ten are holds, and two are buys.
So while Wesfarmers may be able to keep growing earnings, it's clear some analysts don't think the Wesfarmers share price has much more to rise in the shorter term.
