

The Wesfarmers Ltd (ASX: WES) share price has been rangebound on Monday and remains bottom-heavy at $49.56, down 0.81%.
After dropping sharply from the open, Wesfarmers’ shares managed to claw back from a low of $49.36 in early trade.
What’s up with the Wesfarmers share price?
Whilst ASX consumer discretionary shares are generally trading higher today, Wesfarmers shares have slipped lower.
Despite no market-sensitive updates, analysts at Citi have downgraded their recommendation on Wesfarmers from neutral to sell.
The investment bank anticipates that Australian households will have reduced capacity to spend on domestic retail in FY22 and FY23. It predicts the sector is set to face headwinds to the tune of $68 billion and $61 billion respectively.
It also expects “a further drag from additional interest rate increases and the resumption of normal travel activity in FY24”.
The broker mentions both Harvey Norman and home hardware giant Bunnings throughout its review, noting the latter’s softer earnings prospects.
It slashed its valuation on Wesfarmers by 16% to $42 per share, citing risks to “margins normalising back towards pre-COVID levels and slower revenue growth as the housing market cools”.
Meanwhile, 25% of brokers covering the stock have Wesfarmers still rated as a buy while 50% have it rated as a hold, according to Bloomberg data.
The remaining 25% of coverage urges its clients to sell Wesfarmers shares. The consensus price target from this list is $49.60, raising questions on whether Wesfarmers is fairly priced at its current levels.
In the last 12 months, the Wesfarmers share price has compressed down by more than 8% after a 16% slump this year to date.
The post What’s dragging on the Wesfarmers share price on Monday? appeared first on The Motley Fool Australia.
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Motley Fool contributor Zach Bristow 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 has positions in and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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