Wesfarmers Ltd (ASX: WES) shares have stormed higher over the past two months after a choppy start to 2026.
In mid-July, shares in the conglomerate – whose retail subsidiaries include Bunnings Warehouse, Kmart Australia, Officeworks, and Priceline – jumped to an eight-month high of $92.96, but quickly cooled.
The business benefited from an uptick in consumer spending and news that interest rates could start falling. Wesfarmers' sheer scale and market dominance across several retail sectors has also helped reinforce the company's competitive advantage.
The company has also been actively expanding. The company has opened five Anko stores in the Philippines and plans to launch another five by the end of FY27. Locally, its Bunnings brand continues to expand into new categories, including pet products and automotive accessories. And also its Kmart segment is testing larger K Home stores in an attempt to break into the furniture retail market.
Now the question is, after the latest rebound, are Wesfarmers shares now too expensive? Or is there more upside to come in August?
Here's what the experts think.
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Should I buy Wesfarmers shares in August?
At the time of writing, the Wesfarmers shares are trading for $89.22 a piece.
But it looks like we could see their value slide once again this month.
Analyst sentiment around the outlook for the conglomerate's shares over the next 12 months is pretty bearish, with many tipping large downsides ahead.
Market Index data shows that the majority of brokers have a sell rating on the shares. The $78.90 average target price implies a potential 12% downside at the time of writing.
TradingView data shows something similar. Out of 14 analysts, eight have a strong sell rating on the shares. The average target price is slightly lower at $77.69, implying a 13% downside. But some have forecast that Wesfarmers shares could crash 27% to $65.10 over the next 12 months.
Morgan Stanley recently downgraded the ASX 200 consumer discretionary share to a sell rating but lifted its 12-month price target slightly to $79, from $78.70. The broker warned that the rally in discretionary spend stocks has "run ahead of fundamentals and is unlikely to prove durable".
Tony Locantro from Alto Capital also has a sell rating on Wesfarmers shares. He said that while the company delivered a strong first-half result, much of its quality and long-term growth outlook looks fully reflected in the current valuation. He added that future upside may be constrained by elevated market expectations.
My take on Wesfarmers shares
I wouldn't rush to add Wesfarmers shares to my portfolio in August. But the shares are still valuable from a passive income perspective. The business is forecast to pay its shareholders a dividend of up to $2.33 per share in FY27, representing a 7.9% year-over-year increase.
At the time of writing, that forecast translates into a forward dividend yield of around 2.6% for FY27. That's not a huge yield, but the payments are consistent for investors who want reliable passive income.
