Guggenheim Sees 16% Upside In Wal-Mart Shares

Guggenheim expects Wal-Mart Stores, Inc. WMT to offeran  update on its tactics for e-commerce during the October 6 Annual Meeting. The retailer is also expected to offer more lights on its investment on labor.

However, the firm pointed out four reasons for initiating a Buy rating and $82 price target.

In the last four quarters, the company's EPS provided positive surprise. The company's top-line beat in the most recent quarter surprised the Street analysts, who started to look back at the stock.

Related Link: Sustaining Top-Line Momentum Is Key For Wal-Mart

The brokerage listed five key factors to support its investment thesis:

• Expects online sales growth to accelerate on the back of $13 billion achieved in 2015
• Jet.com acquisition to help create a powerful online platform supporting long-term e-commerce growth
• Slowing square feet growth is a positive factor since the retailer could reallocate such capital to e-com
• The biggest retailer's current dividend provides 3 percent yield and $20 billion share buyback program
• Continued momentum in comp

"The WMT U.S. segment has delivered 8 straight quarters of positive comp sales growth and 7 with positive traffic. The segment last delivered 8 consecutive positive comps from 2Q07-1Q09, during the Great Recession. We believe it is easier to keep momentum than it is to get," the brokerage said in a note.

Guggenheim sees Wal-Mart in-line with the expectations of delivering revenues of $485 billion for 2016.