Deutsche Bank Still Holding Wal-Mart

Deutsche Bank’s Paul Trussell maintained a Hold rating for Wal-Mart Stores, Inc. WMT, with a price target of $62.

With persisting FX-headwinds, Wal-Mart’s International sales were impacted by $4.7B in 4Q, representing the highest one-year FX drag in the company’s history, at $17.1B. “Consistent with YTD trends, SSS were fueled by Walmex and Canada, with a neutral Brazil, while the U.K. and China were in negative territory,” analyst Paul Trussell said.

On a reported basis, total international sales declined 9.7 percent y/y to $32.7B in 4Q15, representing a currency impact of $4.7B. Excluding FX, sales rose 3.3 percent y/y to $37.4B. “In sum, we estimate that International SSS grew 1.2% in 4Q, accelerating the 2-year stack to 1.1% from 0.7% in the previous quarter,” Trussell mentioned.

Ex-FX, EBIT declined significant on account of store closing and restructuring charges. Excluding these items, Wal-Mart’s 4Q15 EBIT would have risen y/y. On a reported basis, International EBIT was down 19 percent y/y to $1.7B in 4Q. “Of note, this implies that operating expenses grew ~62 bps (including the aforementioned charges), given that GPM expanded 4 bps,” the analyst wrote.