The Wesfarmers Ltd (ASX: WES) share price was out of form again on Tuesday.
In late trade, the conglomerate’s shares are down 1% to $52.55.
This means the Wesfarmers share price is now down 11% since the start of the year and 22% from its 52-week high.
Is the Wesfarmers share price in the buy zone?
While the weakness in the Wesfarmers share price is disappointing for shareholders, it could be a buying opportunity for non-shareholders.
That’s the view of the team at Morgans, which recently upgraded the company’s shares to an add rating with an improved price target of $60.80.
Based on the current Wesfarmers share price, this implies potential upside of almost 16% over the next 12 months.
In addition, the broker is forecasting a fully franked $1.51 per share dividend in FY 2022. This represents a 2.9% yield, which lifts the total potential return to over 18.5%.
What is the broker saying?
Morgans sees a lot of value in the Wesfarmers share price following recent weakness.
At the time of its upgrade, the broker commented: “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.”
“We see WES as a high-quality company with a healthy balance sheet and well-regarded management team. Despite short term challenges related to COVID, we think the recent pullback in the share price provides a good entry point for longer-term investors,” it added.
The post Is Wesfarmers (ASX:WES) share price in the buy zone after recent weakness? appeared first on The Motley Fool Australia.
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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.
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