Invested in Wesfarmers (ASX:WES) shares? Here’s what to watch in 2022

a woman looks through a magnifying glass that englarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.

The Wesfarmers Ltd (ASX: WES) share price has had an interesting year in 2021 thus far. This is a company that has given investors a reasonably healthy return over the year to date. Since January, the Wesfarmers share price has risen by 13.8%, going from the $51.51 a share that we saw back in early January to the share price of $58.56 that this ASX industrial conglomerate is commanding today (at the time of writing).

Adding Wesfarmers’ healthy dividend to that total, and investors have enjoyed returns of approximately 16% over 2021. That compares pretty well against the S&P/ASX 200 Index (ASX: XJO), which has returned around 10% on today’s pricing over the year thus far.

But now that we are almost a week away from the start of 2022, what might next year hold for Wesfarmers?

I don’t know about you, what’s Wesfarmers got for 2022?

Well, the biggest development shareholders might be watching next year is the ongoing struggle Wesfarmers is currently locked in to acquire the pharmacy operator Australian Pharmaceutical Industries Ltd (ASX: API). Wesfarmers, which already owns a 19.3% stake in API, lobbed a bid for the company at $1.55 a share back in November. But since then, its arch-rival Woolworths Group Ltd (ASX: WOW) has entered the fray, upping the ante with a higher bid of $1.75 per share.

No doubt shareholders will be wondering if Wesfarmers needs to up its bid to match that of Woolworths in 2022. Or if it will be able to use its existing stake in API to secure the deal on its original terms. Or, indeed, if Woolworths manages to outmaneuver Wesfarmers and acquire API for itself. However this deal turns out, it looks set to play a major role in Wesfarmers’ 2022.

But what kind of share price movements should investors expect to see next year?

Well, one broker who wasn’t too keen on Wesfarmers last month was Citi. As my Fool colleague Tristan covered at the time, back in November, Citi rated Wesfarmers shares as a sell, with a 12-month share price target of $50 a share. That implies a potential future downside of 15% or so over the next 12 months. Citi simply thinks Wesfarmers shares are overvalued at the current time, with its price-to-earnings (P/E) ratio of 28.

No doubt shareholders will be hoping that doesn’t turn out to be accurate.

At the current Wesfarmers share price, this ASX 200 blue chip has a market capitalisation of $66.83 billion, with a trailing dividend yield of 3.04%.

The post Invested in Wesfarmers (ASX:WES) shares? Here’s what to watch in 2022 appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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