The Wesfarmers Ltd (ASX: WES) share price has started 2022 in a disappointing fashion.
Since the start of the year, the conglomerate’s shares have fallen approximately 7%.
Is the Wesfarmers share price good value?
One leading broker that believes the Wesfarmers share price could be good value after its recent pullback is Morgans.
According to a note, the broker has upgraded the company’s shares to an add rating with an improved price target of $60.80.
Based on the current Wesfarmers share price of $55.63, this implies potential upside of almost 9.5% over the next 12 months before dividends. If you include the $1.51 per share fully franked dividend the broker is forecasting in FY 2022, the potential return stretches to 12%.
What did Morgans say?
Morgans was pleased with Wesfarmers’ first half trading update this week and notes that it was better than its analysts were expecting.
The broker said: “WES advised that 1H22 NPAT is expected to be between A$1,180-1,240m (above Morgans of A$1,037m but in line with consensus expectations) with Bunnings and WesCEF performing well while Kmart Group and Officeworks were impacted by COVID-related disruptions and costs.”
In light of this and recent weakness in the Wesfarmers share price, the broker feels now could be a good time to buy this “high-quality company.”
It concluded: “We continue to see WES as a high-quality company with its share price down 6% over the past month and 15% versus its peak of A$64.98 on 20 August 2021. While not cheap based on FY22 forecasts (30.3x PE and 2.7% yield), the stock looks more attractive on FY23 forecasts (26.7x PE and 3.1% yield). We expect the market will turn its focus to FY23 estimates over the coming months.”
The post Morgans upgrades Wesfarmers (ASX:WES) shares to buy rating appeared first on The Motley Fool Australia.
Should you invest $1,000 in Wesfarmers right now?
Before you consider Wesfarmers, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Wesfarmers wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
More reading
- ASX 200 (ASX:XJO) midday update: Rio Tinto’s Q4 update, JB Hi-Fi rockets, Kogan sinks
- Own Wesfarmers (ASX:WES) shares? Jefferies just lowered FY22 earnings forecasts
- Is Wesfarmers (ASX:WES) about to buy Greencross?
- Why Adbri, Australian Ethical, JB Hi-Fi, and Wesfarmers shares are racing higher
- ASX 200 (ASX:XJO) midday update: Wesfarmers’ update, energy shares rise
Motley Fool contributor James Mickleboro 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.
from The Motley Fool Australia https://ift.tt/3qzMh6E
Leave a Reply