Price check: Woolworths (ASX:WOW) shares have already dropped 8% in 2022. Can they recover?

Key Points

• Woolworths shares down 8% in 2022
• Supply chain issues and weak market sentiment dragging down the Woolworths share price
• COVID-19 cases dwindling, with possible end in sight for product limits

What a chaotic time it has been for the Woolworths Group Ltd (ASX: WOW) share price.

The supermarket giant has been battling supply chain challenges following the recent COVID-19 outbreak.

Furthermore, macroenvironmental factors have weighed down overall investor sentiment such as the likely interest rate hikes to curb rising inflation.

At Friday’s market close, Woolworths shares ended the day at $35.05 apiece, up 0.86%. However, when looking at year to date, its shares are down 7.79%.

What are Woolworths’ current woes?

With the ASX slumping since the start of the year, investors may be wondering if Woolworths shares can recover?

The rapid spread of COVID-19 forced thousands of staff to isolate themselves at home whilst waiting for their COVID-19 test results. This created a huge disruption to Woolworths’ supply chain as affected staff were obeying stay-at-home orders.

At one point, a reported 35% of its distribution centres workers were in self-quarantine.

Notably, Woolworths shelves have been laid bare in stores across the country as a result of the staff shortages. This resulted in about 50% of delayed deliveries for major product lines.

While the supply issues have continued to impact stores, product limits have been re-introduced to prevent panic buying.

The good news is that the latest COVID-19 figures are showing that we have already hit the Omicron peak.

The number of cases is on a steady decline with both New South Wales and Victoria recording a significant drop. Each of the southern states are at the lowest number of new cases since late December.

This means that it’s only a matter of time before the supermarket shelves are stacked back to full again and product limits are dropped.

Is this a buying opportunity?

A number of brokers believe that the Woolworths share price is attractively valued.

Multinational investment bank, Macquarie slashed its 12-month price target by 3.6% to $40 for Woolworths shares. This implies an upside of around 14.1% based on the current share price.

In addition, Citi lowered its assessment on Woolworths shares by 1.3% to $39. Its analysts clearly believe that there is still significant value in the company and that a recovery is inevitable. This represents a potential upside of 11.2% from where it trades today.

Woolworths share price snapshot

It’s been a rollercoaster ride for Woolworths shares over the last 12 months, posting a small loss of around 3%.

Woolworths has a price-to-earnings (P/E) ratio of 35.26 and commands a market capitalisation of roughly $42.48 billion.

The post Price check: Woolworths (ASX:WOW) shares have already dropped 8% in 2022. Can they recover? appeared first on The Motley Fool Australia.

More reading

• Could this be the biggest issue faced by ASX retail shares heading into earnings season?
• Will supply chain issues continue to dog Woolworths (ASX:WOW) when it reports this month?
• Could this help Woolworths (ASX:WOW) withstand the current climate of uncertainty?
• Why is the Woolworths (ASX:WOW) dividend smaller than Coles?
• Are ASX consumer staples shares really ‘safe’ to hold in a market selloff?

Motley Fool contributor Aaron Teboneras 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 no position in any of the stocks mentioned. 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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