One veteran analyst increased his price target and upgraded Walmart (WMT) stock on Thursday, saying that Walmart’s foot traffic is trending higher.
Shares were upgraded from in-line to outperform and the price target was raised from $145.00 to $160.00 because of “management’s diligent work to pivot the business to omnichannel, divest non-core assets, and invest in productivity,” according to a note by Evercore analyst Greg Melich.
The veteran analyst claims that Walmart’s delivery service Walmart+ and its advertising network Walmart Connect are two examples of the company’s investments in its omnichannel strategy. Meanwhile, the store’s mobile software is also gaining popularity. The number of downloads is almost 2 million so far this year, which is fewer than Amazon (AMZN) but higher than Target (TGT), Costco (COST)
Customers of all income levels are flocking to Walmart in search of bargains in this era of rising prices. Customer visits to stores increased by 2% in Q4 from Q3, though this is still significantly lower than levels seen before the epidemic. Recurring revenue? 8% growth in overall sales and 7% in average order value.
After several years of high nominal retail spending, consumers across the demographic spectrum are making wallet allocation decisions, and Walmart is in a good position to regain share, according to Melich.
He continued, “Difficult times can also prove a catalyst for engaging new customers with Walmart, as Walmart’s core strengths in value and selection take on greater import (importance).”
The most recent quarter, Q4, which included the crucial holiday season for retailers, saw total profits of $5.81 billion, up significantly from $3.6 billion in the corresponding period a year earlier. Earnings for the entire fiscal year were down marginally from the previous year. Earnings for the fiscal year 2023 amounted to $11.29 billion. There will be a total expenditure of $13.94 billion in FY2022.
The 2023 Investment Community Meeting will be held next week at Walmart. As Melich put it, “we might be early” with these forecasts, “as the April analyst day could pose a risk if management tries to bludgeon the Street to their guidance range.”
While the retail industry as a whole is slowing down, he continued, “we like Walmart’s scale, balance sheet, and stability.”
Melich added that Sam’s Club, a Walmart subsidiary that specializes in wholesale, is “building loyalty, traffic, and renewal rates,” accounting for 14% of sales, providing further cause for optimism. He noted that over the previous three years, Sam’s comparable sales had increased by an average of double digits. China and India “could see better sales and profit momentum as the world heals from COVID,” while Walmex and Canada “remain strong” and account for 10% of Walmart’s sales.
Melich is one of many optimistic Wall Street experts regarding Walmart. There have been 36 purchase orders, 11 hold orders, and zero sell orders placed as of Thursday morning.
Whenever inflation slows down, CEO Doug McMillon wants to be able to keep its higher-paying clients. We want customers to continue choosing us even once inflation finally declines based on their experiences in our stores and clubs and our present membership, pickup, and delivery services.
Walmart Inc. (NYSE: WMT) helps people around the world save money and live better — anytime and anywhere — in retail stores, online, and through their mobile devices. Each week, over 265 million customers and members visit approximately 11,500 stores under 56 banners in 27 countries and eCommerce websites. Walmart employs over 2.2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting corporate.walmart.com, on Facebook at facebook.com/walmart and on Twitter at twitter.com/walmart. and BJ’s (BJ’s). (BJ).
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