Wesfarmers Ltd (ASX: WES) shares have been on a remarkable run.
At the time of writing, the retail giant's shares are up around 20% over the past month to $86.27. That comfortably outpaces the S&P/ASX 200 Index (ASX: XJO), which has gained approximately 5% over the same period.
The outperformance extends beyond the past month. Wesfarmers shares have risen roughly 6% in 2026, compared to a gain of around 2.5% for the broader market.
But after such a strong rally, investors may be wondering whether the shares are still worth buying.
Image source: Getty Images
Why investors love Wesfarmers
Wesfarmers is one of Australia's highest-quality businesses.
The company owns a portfolio of leading brands, including Bunnings, Kmart, Officeworks, Priceline, and Blackwoods. These businesses generate significant cash flow and have built strong competitive positions in their respective markets.
Bunnings remains the crown jewel of the portfolio, benefiting from its dominant position in the home improvement sector. Kmart has also delivered impressive growth in recent years by offering value-focused products that resonate with consumers during periods of economic uncertainty.
Another strength is Wesfarmers' balance sheet and disciplined capital allocation. Management has a strong track record of investing in growth opportunities while returning capital to investors in Wesfarmers shares through dividends.
These qualities help explain why the company has consistently rewarded long-term investors.
What are the risks?
The challenge is that great businesses do not always make great investments at every price.
Following the recent rally, some analysts believe Wesfarmers shares are trading above fair value. The company held a strategy day last week, but investors did not receive a meaningful trading update or any major new catalyst that could drive earnings expectations higher in the near term.
There are also broader risks to consider. Retail spending remains sensitive to economic conditions, interest rates, and consumer confidence. While Bunnings and Kmart have proven resilient, a slowdown in spending could still affect growth.
Valuation is another concern. When a stock trades at a premium multiple, even a small earnings disappointment can lead to a sharp share price correction.
Buy, hold, or sell?
According to TradingView data, analysts appear divided on the outlook.
Most analysts currently rate Wesfarmers shares as a hold, suggesting they see limited upside from current levels. More notably, four of the 14 analysts covering the stock now have a strong sell recommendation.
While opinions differ, analysts broadly agree that the shares may have run ahead of fundamentals. In fact, the lowest price target on the stock is $65.10.
Based on the current share price of $86.27, that target implies downside of approximately 24% over the next 12 months.
As a result, while Wesfarmers remains a high-quality ASX share with excellent businesses and a strong long-term track record, investors may want to consider whether its recent rally has already priced in much of the good news.
