Morgan Stanley Sees 'Reasonable Goals' At Wal-Mart But Not Enough To 'Shape A Bull Case'

In a report published Thursday, Morgan Stanley analyst Simeon Gutman discussed a recent meeting with

management that "left a little to be desired." According to Gutman, expectations heading into the meeting were not high as he was hoping to learn greater detail over the company's US strategy, including how it will reinvigorate the Supercenter base, how a format mix shift to smaller stores will impact financials and greater commentary on omni-channel initiatives. "While we heard many reasonable goals (discussed below), they were mostly tactical in nature, blocking and tackling type fixes that could apply to many retailer," Gutman wrote. "The evolving and increasingly dynamic competitive environment (with omni-channel being front and center) seems to demand an even higher level of sophistication, in our view." Gutman continued that it is possible the executives were being "cagey" on purpose and keeping its strategy "close to the vest." The analyst added that this would be consistent as Wal-Mart's U.S. CEO Greg Foran is taking a long term approach to the business and the reality is that early stages of change are "sometimes not that exciting." Bottom line, Gutman argued that the strategic update "left a little to be desired" and shares will trade on the direction of comps – which are heading in the right direction, thereby limiting upside. Shares remain Equal-weight rated with an unchanged $88 price target.