UBS has cut its price target for Wesfarmers due to expected sales weakness in the company’s retail divisions.
“Our forecasts for WES fall 4-16 per cent, largely reflecting material cuts to near-term forecasts from COVID-19 across Bunnings, Kmart, Target and Wesfarmers Industrial and Safety, as well as updating for the $1.06 billion pre-tax Coles Group sell-down,” the investment bank wrote.
“We see significant risk to our forecasts, but now aim to reflect a two to three month hibernation of economy, a 10-20 per cent decline in house-prices, the shutdown of New Zealand stores but not the company’s Australian operations and a gradual recovery in late 2020, but not back to 2019 levels.”
The forecast changes have seen its price target for WES fall to $33.80 from $37.00 seen previously.
However, UBS retains a neutral rating on the company.
“We see WES as better positioned than most discretionary players, but it will be impacted,” it said.
WES shares closed at $34.27 on Monday.