What analysts are saying about Wesfarmers shares?

September 03, 2024 08:29 PM PDT | By Team Kalkine Media

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What analysts are saying about Wesfarmers shares? — Image source: © Mohammedsoliman4 | Megapixl.com

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Shares of Wesfarmers Ltd (ASX:WES) fell by as much as 2% to AU$69.95 on Wednesday, hitting their lowest point since early August. The drop comes amidst growing skepticism about the conglomerate's valuation and its business segments.

Analyst Ratings and Valuation Concerns

UBS analysts have weighed in with a critical perspective, suggesting that investors may be overvaluing Wesfarmers, particularly its hardware chain, Bunnings. UBS has retained a "Sell" rating on the stock and set a price target (PT) of A$66. The brokerage's concerns center around the perceived overpricing of Bunnings, which could be contributing to the current decline in Wesfarmers' stock price.

Lithium Market Impact

Adding to the pressure, UBS notes that lithium has become a less significant support for Wesfarmers' chemicals, energy, and fertilizers business. The reduction in lithium prices and mixed customer demand have lessened the positive impact of this segment on the company’s overall performance.

Market Sentiment

Wesfarmers' stock performance has shown volatility among analysts. Of the 15 analysts covering the stock, only one rates it as a "Buy" or higher, seven maintain a "Hold," and seven have a "Sell" or lower rating. The median price target among analysts is AU$64.75, according to LSEG data.

Year-to-Date Performance

Despite the recent decline, Wesfarmers' stock has seen a notable increase of 25.2% year-to-date, reflecting strong performance earlier in the year.

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