Woolworths shares: Buy, hold, or fold?

Could the Woolworths share price offer 28% upside?

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A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently

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Key points

  • The Woolworths share price has slumped 10% year to date to trade at $34.46 
  • Brokers offer mixed opinions on the stock's future 
  • One top broker is tipping the Woolworths share price to gain 28% while another expects it will fall 9% 

The share price of S&P/ASX 200 Index (ASX: XJO) supermarket giant Woolworths Group Ltd (ASX: WOW) hasn't managed to dodge 2022's carnage.

The stock has dumped 9% since the start of the year to currently trade at $34.62.

Meanwhile, the ASX 200 has fallen 12% and the company's home sector, the S&P/ASX 200 Consumer Staples Index (ASX: XSJ), has slipped 7%.

Have recent struggles put Woolworths shares squarely in the buy zone? Well, that depends on who you ask.

Here's what brokers are expecting from the ASX 200 supermarket operator.

What might the future hold for Woolworths shares?

Various brokers have vastly differing outlooks for Woolworths shares, with one tipping an upside of 28% and another expecting a 9% tumble. Let's start with the bears.

Credit Suisse believes the supermarket's stock is expensive compared to its peers right now, while its future growth may come at a high cost, my Fool colleague Tristan reports.

The broker has slapped Woolworths shares with an underperform rating and a $31.37 price target – 9% lower than its current level.

Alto Capital's Tony Locantro is also wary of the stock, reportedly slapping it with a sell rating. Locantro said, courtesy of The Bull:

While cost pressures have eased, we're concerned about the impact from broad cost of living increases on its customers moving forward.

Indeed, Woolworths' CEO Brad Banducci admitted financial year 2023 could remain "volatile and challenging" for the company amid COVID-19 disruptions, supply chain issues, rising costs, and customers' cost of living pressures.

The company posted around $61 billion of sales and a $1.5 billion after-tax profit for financial year 2022. That's despite it having battled against supply chain disruptions, product shortages, high absenteeism, and major flood events.

But not all experts are pessimistic on the supermarket giant.

In fact, Goldman Sachs is incredibly bullish, dubbing Woolworths shares a conviction buy and slapping them with a $44.10 price target. That represents a potential 28% upside.

The broker was pleased with the company's full-year earnings and optimistic for its future.

It said it expects that the company's digital and omnichannel advantage will continue to drive market share and margin gains.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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