---
endpoint: analytics
pattern: Consumer
status: done
latency_ms: 151959
conversation_id: 9b09cfc1-2763-4866-8990-1093f44f2a13
citations: 8
created: 2026-05-31 21:06:56Z
---

# Is CLSA incrementally more positive/negative on Wesfarmers. If so, why?

## CLSA on Wesfarmers (WES AU) — Incremental View

**Headline: Mixed and recently turning incrementally more cautious.** CLSA has held a **HOLD** rating on WES across every WES-specific note in the corpus (latest five notes, Aug-2024 → Mar-2025), but the trajectory of price target, valuation language, and implied total shareholder return (TSR) shows a fundamentally constructive tone that has been **capped — and most recently trimmed — by valuation discipline**.

### Rating + Target Price Trajectory (lead analyst: Richard Barwick, CLSA)

| Date | Note | Rating | 12M PT (A$) | Implied TSR | EPS revision |
|---|---|---|---|---|---|
| 29-Aug-2024 | Quality at a very full price | HOLD | **68.10** | -8% | FY25 EPS growth cut to 5% (from 11%) [1][8] |
| 31-Oct-2024 | Well positioned | HOLD | **68.50** (+0.6%) | +2% | FY25 EPS -3%; FY26/27 -1% [2] |
| 21-Jan-2025 | No more Catch | HOLD | 68.50 (unchanged) | -5% | FY25 EBIT -1.5% (Catch wind-down) [3] |
| 20-Feb-2025 | Getting to grips | HOLD | **73.10** (+6.7%) | -3% | Small downgrade to FY25 EPS [4][5] |
| 27-Mar-2025 | Building better | HOLD | **70.10** (-4.1%) | 0% / -3% | Small upgrades to forecasts [6][7] |

### Is CLSA Incrementally More Positive or More Negative?

**Net incremental direction: Slightly negative at the most recent print (Mar-2025), after a period of incrementally positive moves.**

The trajectory has two distinct phases:

**Phase 1 — Incrementally MORE POSITIVE (Aug 2024 → Feb 2025)**
- PT lifted from A$68.10 → A$68.50 → A$73.10 (~+7% total) [1][2][4]
- In Feb-2025, CLSA went so far as to switch its valuation methodology to **100% PER (from 50% PER / 50% DCF)** — explicitly accommodating a higher multiple because "Wesfarmers is trading, and can continue to trade, **beyond its fundamental value**" given (i) favourable EPS growth vs peers, (ii) retail portfolio "positioned for the times", (iii) supermarkets out of favour, (iv) falling rates making banks less attractive [5].
- Fundamental endorsement strengthened: Bunnings, Kmart and Officeworks (now ~88% of group earnings) described as "best-in-class" and "price leaders" in their categories [4].
- The Catch wind-down (Jan-2025) was framed as **strategically prudent** despite the EBIT hit — supportive of long-term group earnings quality [3].

**Phase 2 — Incrementally MORE NEGATIVE (the latest Mar-2025 note "Building better")**
- PT **cut** by 4% to A$70.10 (from A$73.10) — the **first PT downgrade in the sequence** [6].
- Cut occurred **despite small upgrades to earnings forecasts**, because CLSA "marked the multiple to market" — i.e., the market multiple compressed, and CLSA chose to follow rather than defend the higher target [6].
- Implied TSR fell to **0% (-3% on price action alone)** — the worst implied upside in the visible sequence [6][7].
- Fundamental tone on Bunnings remained constructive (A$110bn TAM, growing/evolving offering, best-in-class IR access), but this was **insufficient to outweigh the valuation reset** [6].

### Why the Recent Caution?

CLSA's HOLD has consistently been a **valuation call, not an operational one**:
- Stock has been "trading >2SD above historic relative PEs" through the period [4].
- Even the Feb-2025 PT raise was caveated as "full but fair" at 28.9x FY26 EPS [5].
- The Mar-2025 PT cut reflects CLSA conceding it cannot underwrite further multiple expansion — and willingness to follow market multiples down — even when its earnings view is unchanged-to-slightly-better [6].

### Bottom Line

CLSA is **fundamentally constructive on Wesfarmers' operating businesses** (Bunnings/Kmart/Officeworks as best-in-class, premium-warranted earnings quality) but has become **incrementally more cautious on valuation in the most recent note**: the first PT cut of the sequence (-4% to A$70.10) and a 0% implied TSR mean CLSA is currently signalling the stock is **fully priced and offers no upside to fundamental fair value** [6][7]. Versus three months ago (Feb-2025), the incremental shift is **modestly negative**. Versus 12 months ago, the cumulative shift is still **positive** (PT +3% from A$68.10, methodology more accommodating, prior bear-case language softened), but the most recent inflection is downward.

---

**Sources**
[1] Wesfarmers – HLD (Quality at a very full price) — CLSA (29 Aug 2024) — 607937933LinqAlpha.PDF
[2] Wesfarmers – HLD (Well positioned) — CLSA (31 Oct 2024) — 607942769LinqAlpha.PDF
[3] Wesfarmers – HLD (No more Catch) — CLSA (21 Jan 2025) — 607948619LinqAlpha.PDF
[4] Wesfarmers – HLD (Getting to grips) — CLSA (20 Feb 2025) — 607951170LinqAlpha.PDF
[5] Wesfarmers – HLD (Getting to grips) — CLSA (20 Feb 2025) — 607951170LinqAlpha.PDF [PER methodology change / -3% TSR]
[6] Wesfarmers – HLD (Building better) — CLSA (27 Mar 2025) — 607954184LinqAlpha.PDF
[7] Wesfarmers – HLD (Building better) — CLSA (27 Mar 2025) — 607954184LinqAlpha.PDF [PT table 27 Mar 2025]
[8] Wesfarmers – HLD (Quality at a very full price) — CLSA (29 Aug 2024) — 607937933LinqAlpha.PDF [FY25 EPS growth tempered from 11% to 5%]

## Citations

- [1] **607937933LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/08/607937933LinqAlpha.PDF>
- [2] **607942769LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/10/607942769LinqAlpha.PDF>
- [3] **607948619LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/01/607948619LinqAlpha.PDF>
- [4] **607951170LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951170LinqAlpha.PDF>
- [5] **607951170LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607951170LinqAlpha.PDF>
- [6] **607954184LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954184LinqAlpha.PDF>
- [7] **607954184LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/03/607954184LinqAlpha.PDF>
- [8] **607937933LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2024/08/607937933LinqAlpha.PDF>

