Wal-Mart Surges on Jefferies’ Bullish Stance

The shares of Wal-Mart Stores, Inc (NYSE: WMT) rallied by as much as 1.20 percent on Monday to hit $71.72 during pre-market hours. As of 8:43 AM GMT-4 on June 7, the company’s stock is changing hands by $71.07, up by 0.03 percent or 0.02.

The bullish movement in the WMT stock comes after market analyst Daniel Binder at Jefferies upgraded their rating on Wal-Mart from Hold to Buy during its latest note to investors. The Jefferies analyst boosted his target price to $82 from $60, after the retailer’s checks and surveys showed that the company’s stores recovered because of investments made by the retail giant.

“Based on our store checks and survey work, we believe WMT’s store investments are yielding broadly improved store conditions and Q1 sales results seem to confirm this. We think this improvement will be longer lasting and should lead to upside in sales and an upward EPS revision cycle. We think there are a few things that could move shares higher and improving US store sales momentum is the biggest and most impactful to the bottom line,” stated the Jefferies analyst.

Moreover, Mr. Binder stated that the recent investments of the company in technology, process, stores, and people reflects that store standards are getting better. Furthermore, Jefferies is also confident that the turnaround  execution can result in an increase in sales momentum.

The Jefferies analyst provided several reasons for investors to own Walmart shares. These reasons include better-than-average wage improvements for lower-income households, upgrade in inventory management, as well as greater confidence in enhanced execution.

According to Mr. Binder, a price slash may actually aid in improving sales results and is a next reasonable move. This step must be augmented by better merchant terms, inventory management, and overseas sourcing.

“We think there are a few things that could move shares higher and improving U.S. store sales momentum is the biggest and most impactful to the bottom line,” said the Jefferies analyst.

During Wal-Mart’s latest annual meeting for shareholders, the largest retailer in the United States showed off its mobile payment applications and the utilization of its drones in warehouses. Additionally, the retail giant revealed a grocery-delivery test with Lyft and Uber, and also voted the grandson of founder Sam Walton to  serve as a board member.

In the company’s most recent earnings results, the retailer outperformed other competitors, including Target, which experienced downbeat clothing sales. Wal-Mart posted an almost 1 percent boost in sales at its retail stores that are open for at least 1 year. This marks the 7th consecutive quarterly growth for the retail giant.

At the shareholder meeting, the CEO of Wal-Mart Stores Doug McMillon pointed out that the company intends to add up to $60 billion in new revenue growth within the span of 3 years.

“We get to reimagine retail again, and that’s what we are going to do, there is momentum in this business. It’s real. We can feel it,” said the Wal-Mart CEO.

“We have the opportunity to re-imagine retail. Again, that’s what we’re out to do,” McMillon further added.

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