Why the Wesfarmers (ASX:WES) share price has underperformed the ASX 200 in the last 3 months

The company’s shares are on the comeback of late…
The post Why the Wesfarmers (ASX:WES) share price has underperformed the ASX 200 in the last 3 months appeared first on The Motley Fool Australia. –

The Wesfarmers Ltd (ASX: WES) share price has managed to shoot higher recently after hitting a 6-month low last month. The company’s shares touched the bottom at $53.83 on 11 October before zipping upwards.

However, when looking at the past 3 months, the conglomerate’s shares have lost around 8.6%. By compassion, the S&P/ASX 200 Index (ASX: XJO) has fallen 1.7% over the same time frame.

Below, we take a closer look at what’s been happening with the Wesfarmers share price.

What’s troubling Wesfarmers shares?

Investors have been mixed on the Wesfarmers share price as the company continues to navigate its way through COVID-19.

Wesfarmers released the notes from its annual general meeting (AGM) last month, holding back on providing a new trading update.

The company reported very similar commentary to how it performed over the FY21 period

In particular, it stated that some of its businesses, such as Bunnings, K-mart and Target, were impacted by store closures. Although, it said strong online sales managed to offset the loss of potential revenue.

On the other hand, Officeworks thrived as customer demand for technology and office furniture accelerated. This was attributed to more people working from home due to government-mandated restrictions.

The Wesfarmers chemicals, energy and fertilisers division continued to grow on the back of ammonium nitrate and favourable LPG pricing.

The company has progressed its proposal on acquiring Australian Pharmaceutical Industries Ltd (ASX: API). An all-cash proposal of $1.55 per share was made to buy up the remaining interest in the pharmaceutical chain operator.

Wesfarmers recently upped its stake in Australian Pharmaceutical Industries to a 19.3% interest.

Are Wesfarmers shares a buy?

A number of brokers note weighed in on the company’s shares following the release of its AGM.

Swiss global investment bank Credit Suisse raised its price target on Wesfarmers shares by 0.8% to $60.38. Following suit, Jarden also lifted its outlook by 1% to $60.60 apiece.

While this is slightly above the current Wesfarmers share price of $60.09 at the time of writing, analysts at Citi had a different view.

The firm retained its “sell” rating and put a bearish $50.00 price target on the conglomerate’s shares.

Investors appear to be somewhere around the middle ground between Credit Suisse and Citi’s estimates.

Wesfarmers share price review

In 2021, the Wesfarmers share price has gained 19%, surging past pre-pandemic levels and making new record highs.

Wesfarmers commands a market capitalisation of around $68 billion, making it the 8th largest company on the ASX.

The post Why the Wesfarmers (ASX:WES) share price has underperformed the ASX 200 in the last 3 months appeared first on The Motley Fool Australia.

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More reading

Top brokers name 3 ASX shares to sell next week

Top brokers name 3 ASX shares to sell today

Citi tips Wesfarmers (ASX:WES) share price to dip 16% following API deal

Why API, Evolution, Flight Centre, and Sydney Airport shares are pushing higher

ASX 200 (ASX:XJO) midday update: Sydney Airport agrees to takeover, Wesfarmers’ strikes API deal

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 owns shares of 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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