The Wesfarmers Ltd (ASX: WES) share price is in the green in Tuesday afternoon trade. At the time of writing, the shares are 0.38% higher at $82.95 a piece.
For the year to date, shares in the retailer, which owns the Kmart Group, Bunnings Warehouse, Officeworks, Priceline, and many more household names, have climbed 1.47%. They're now trading 15.58% ahead of this time last year.
Image source: Getty Images
Why is the Wesfarmers share price in the spotlight this week?
On Monday, the AFR reported that Wesfarmers had abruptly called off plants to support the largest franchisee in its Priceline pharmacy network, Infinity Pharmacy Group, which owes more than $400 million. The move means the company is on the verge of collapse and has been pushed into receivership.
In an update today, the AFR said that Wesfarmers reportedly "accused the owner of the largest Priceline franchisee [Infinity Pharmacy Group] of embarking on a debt-fuelled acquisition spree even as the business teetered on the brink and was falling behind in paying suppliers".
The Wesfarmer share price has fallen 0.126% since Monday morning. While the latest news doesn't appear to have affected the stock right now, it could affect investor sentiment as the group moves closer to its FY26 half-year results announcement. Wesfarmers is expected to post its next update next month on the 19th February.
The retail company's annual general meeting (AGM) in late October slashed investor confidence and caused a sharp 15% sell-off. Some areas of the business saw year-to-date sales growth, but management said that challenging trading conditions have affected its Industrial and Safety division.
What do analysts think of the stock?
Analysts are bearish on the outlook for Wesfarmers shares. TradingView data shows that 7 out of 15 analysts have a sell or strong sell rating on Wesfarmers shares. Another 6 have a hold rating, while two have a strong buy rating.
The average target price is currently $81.64, implying a 2.14% downside for investors over the next 12 months at the time of writing. Although the difference between the maximum and minimum 12-month target price is significant.
Some analysts think the shares could fall another 23.78% to $63.60 over the next 12 months, from the current trading price. Meanwhile, others are much more optimistic and expect the Wesfarmers share price to jump 19.8% to $100 per share.
In my view, Wesfarmers shares are a long-term passive-income play rather than a short-term gain play.
The company is one of the most effective ASX blue-chip shares to own over the long term. That's because while Wesfarmers is famous for its household-name retailers, it also owns several other businesses. This diversity helps the company maintain a strong track record of delivering growth while consistently increasing dividends for shareholders.
