In key news on Australian stocks, Goldman Sachs analyst Lisa Deng reaffirmed her bullish view on Wesfarmers Limited (AU:WES), ahead of the company’s Strategy Day event scheduled on May 2, 2024. Deng increased her price target for WES stock from AU$66.00 to AU$68.80, implying a modest gain of 1.4%. The analyst believes the company has strong opportunities to grow, which are currently undervalued and not factored into the share price.
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WES stock gained 0.93% in today’s trading session, with a year-to-date gain of almost 18%.
Wesfarmers is an Australian conglomerate with a wide range of operations across several categories, including home décor, beauty, pharmacy, retail, and apparel.
Goldman’s Bullish Stance on Wesfarmers
Goldman Sachs expects strength in the Australian DIY (do-it-yourself) home improvement sector and cost efficiencies to enhance free cash flow for Wesfarmers’ new platform investments. Deng and her team are bullish on the company’s Digital, Retail Media, and WES Health businesses.
In Digital, Deng highlighted the company’s vast range of customer data, which includes 63 million monthly retail website visits in the first half of FY24 and 14.2 million loyalty members. Speaking of Retail Media, the analyst anticipates that the Australian market will reach AU$2.7 billion in FY30, accounting for around 17% of advertising revenue. Deng sees the Retail Media business as an “adjacent opportunity” to the company’s digital strategy and expects it to add around 1% to WES’s retail sales and 4% to its EBIT (earnings before interest and tax) in FY30.
In the realm of WES Health, the company has a total addressable market of AU$97 billion, with the potential for profit generation of AU$9 billion, representing another substantial opportunity for Wesfarmers.
What is the Prediction for Wesfarmers?
As per the consensus rating on TipRanks, WES stock has a Hold rating backed by one Buy, five Hold, and three Sell recommendations. The Wesfarmers share price forecast is AU$56.43, which is 17% below the current level.
