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Walmart Posts Standout Quarter, But Raymond James Downgrades On Flipkart Costs

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Walmart Posts Standout Quarter, But Raymond James Downgrades On Flipkart Costs
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Walmart Inc (NYSE: WMT) delivered a solid second quarter earnings and sales beat Thursday, but was still hit with a downgrade by a still-bullish Raymond James. 

The Analyst

Raymond James analyst Budd Bugatch downgraded Walmart from a Strong Buy to Outperform and raised the price target from $100 to $107.

The Thesis

Walmart posted its best quarterly performance since the Great Recession 40-percent e-commerce sales growth, but Bugatch still slapped Walmart with a downgrade. (See the analyst's track record here.) 

The analyst said he supports the retailer's long-term strategy of continued investment in growth geographies and opportunities in the new world of retail like Flipkart, but said he cannot ignore that the acquisition of the Indian e-commerce company will weigh on consolidated operating earnings.

Once the deal closes, it will slice 4 to 5 cents per share per month from Walmart's adjusted earnings, Bugatch said. Raymond James' adjusted 2019 estimate for Walmart sits at $4.78, but that figure would be $5 sans the Flipkart acquisition, he said. 

“The total drag for [2019 and 2020] operating earnings will depend on when the investment closes and the level of incremental investments needed to continue [to] grow the business going forward." 

Price Action

Walmart shares were down 0.56 percent at $98.10 at the time of publication Friday. 

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Photo courtesy of Walmart. 

 

Latest Ratings for WMT

DateFirmActionFromTo
Sep 2018BMO CapitalInitiates Coverage OnOutperform
Sep 2018Goldman SachsReinstatesBuyNeutral
Aug 2018ArgusMaintainsBuyBuy

View More Analyst Ratings for WMT
View the Latest Analyst Ratings

Posted-In: Budd Bugatch Raymond JamesAnalyst Color Earnings News Downgrades Price Target Analyst Ratings Best of Benzinga

 

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