Should you buy the dip in the Wesfarmers share price?

The Wesfarmers Ltd (ASX: WES) share price has come under pressure on Thursday with the rest of the market.

In afternoon trade, the conglomerate’s shares are down 3.5% to $45.15.

This means the Wesfarmers share price is now down almost 25% since the start of the year.

Is the Wesfarmers share price weakness a buying opportunity?

While the weakness in the Wesfarmers share price this year has been disappointing for shareholders, it could be a buying opportunity for the rest of us.

That’s the view of a couple of brokers, which see plenty of value in its shares at the current level.

For example, a note out of UBS last week reveals that its analysts have a buy rating and $55.00 price target on its shares. This implies potential upside of 22% for investors over the next 12 months.

The broker notes that trading conditions are very positive for Wesfarmers Chemicals, Energy and Fertilisers (WesCEF) business at present thanks to strong customer demand and favourable commodity prices.

Who else is bullish?

Elsewhere, analysts at Morgans have an add rating and slightly higher price target of $55.60 on its shares. This suggests potential upside of 23% for investors between now and this time next year for the Wesfarmers share price.

It is also worth noting that Morgans has the company on its best ideas list. These are the shares the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe. They are also supported by a higher-than-average level of confidence. The broker commented:

WES possesses one of the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks. The company is run by a highly regarded management team and the balance sheet is healthy. While COVID-related staff shortages are proving to be a challenge, the core Bunnings division (>60% of group EBIT) remains a solid performer as consumers continue to invest in their homes. We see the pullback in the share price as a good entry point for longer term investors.

The post Should you buy the dip in the Wesfarmers share price? appeared first on The Motley Fool Australia.

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More reading

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• Amazon stock just tanked. Could this be a canary in the coal mine for ASX 200 retail shares?
• Why I think the Wesfarmers share price is a buy after this week’s AGM
• How I’d build a portfolio by investing in top ASX shares now
• 22 high-yield ASX dividend shares Wilsons is targeting

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 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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