UPDATE: Morgan Stanley Initiates Coverage on Wal-Mart

In a note released Tuesday morning, Morgan Stanly analyst Simeon Gutman initiated coverage on Wal-Mart Stores Inc.

with an Overweight rating and announced a $87 price target. Gutman began, "We view Wal-Mart as a low risk way to play improving lower-end consumer spending over the next 12-18 months." He added, "Wal-Mart's scale, proximity to consumers, importance to suppliers, systems and omni-channel capabilities make it among the best equipped to succeed in the next phase of retailing." His outlook for the company includes "improving fundamentals for lower-end consumers" and a "meaningful second half uptick in food price inflation" which he believes will be able to be passed along to customers. Additionally, he is anticipating SNAP headwinds to subside late in 2014 and says that should help comps. Looking further into the future, Gutman is forecasting 2 percent U.S. comps in fiscal-year 2016, which he noted is 1 percent above the consensus. He further estimates a $0.10 boost to EPS for every point in comps over 1 percent. Following the release of the note, shares of Wal-Mart are trading up slightly around 0.3 percent.