Morgan Stanley Makes The Case For Wal-Mart Stores

In Thursday's morning summary Morgan Stanley analyst Simeon Gutman made the case for his Overweight rating on Wal-Mart Stores WMT, despite the company's flat top line performance.

Gutman's Overweight rating is based on expectations for a pickup in lower end spending in the U.S. within the next nine to 12 months. These expectations reflect increased salaries and wages for low income earners, consumer sentiment and gas & food prices.

Gutman also said that the company should meet near-term estimates due to stable margins and "rigorous expense management." Taking this into consideration, as well as targeted price investments, Gutman said this presents a favorable risk vs. reward situation while waiting for a pickup in the top line.