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Analysts Defend Walmart's Quarter

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Analysts Defend Walmart's Quarter

Walmart Inc (NYSE: WMT) investors were blindsided by a disappointing fourth quarter this week, sending the stock tumbling by more than 11 percent. Several Wall Street analysts have jumped in to defend Walmart following the lackluster quarter.

Here’s a rundown of what they had to say.

Voices From The Street

Bernstein analyst Brandon Fletcher said 2.6 percent same-store sales growth isn't worth paying 20 times earnings for Walmart stock.

“Instead, investors are buying Walmart's stock for a dream. The dream that maybe Walmart can compete with Amazon online and maybe even beat them online in certain categories,” Fletcher said in a note.

Still Bullish

Citi analyst Kate McShane said the Q4 deceleration in online sales growth was expected given that Walmart lapped its 2016 acquisition of Jet.com.

“Overall, we remain bullish on WMT’s prospects in the near and long term as its aggressive omni-channel strategy, everyday low pricing, grocery offerings and productivity initiatives should drive upside,” McShane wrote.

Susquehanna analyst Bill Dreher said the fourth quarter was mostly short-term noise.

“We expect Walmart will demonstrate the earnings power of its omnichannel investments and view the company as the dominant competitor to Amazon and a long-term winner in the omnichannel retail landscape,” Dreher wrote.

Take Advantage Of The Weakness

Baird analyst Peter Benedict said the quarter was certainly mixed, but the sell-off is overdone.

“While we are lowering our estimates/target, we remain encouraged by strong U.S. comp trends and believe ecommerce re-acceleration is likely as 2018 unfolds,” Benedict wrote.

KeyBanc analyst Edward Yruma said Walmart’s fundamentals are solid and its weakness is transient.

“We would take advantage of weakness to add to positions in one of the best fundamental long-term stories in our coverage,” Yruma wrote.

Ratings And Price Targets

Wall Street is mostly bullish on Walmart’s stock following the disappointing quarter, but some firms are more bullish than others:

  • Bernstein has a Market Perform rating and $104 price target.
  • Citi has a Buy rating and $117 price target.
  • Susquehanna has a Buy rating and $126 price target.
  • Baird has an Outperform rating and $105 price target.
  • KeyBanc has an Overweight rating and $112 price target.

Walmart's stock was down another 2.4 percent Wednesday, trading around $91.80 at time of publication.

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Image credit: MikeMozartJeepersMedia - Own work, CC BY-SA 3.0, via Wikimedia Commons

Latest Ratings for WMT

DateFirmActionFromTo
Sep 2019MaintainsOverweight
Aug 2019MaintainsOutperform
Aug 2019MaintainsOverweight

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