- Telsey Advisory analyst Joseph Feldman had an Outperform rating on Walmart Inc WMT with a $165 price target.
- Feldman's discussion with the Walmart IR team increased visibility and confidence in Walmart's ability to gain market share and successfully transform the business over time.
- Walmart continues to see pressure on the consumer from the challenging macro environment and high inflation.
- Consumers continue to shift spending toward grocery and essentials from discretionary products, a trend expected to persist in the near term.
- Walmart believes year two (2023) of a slowdown is often more difficult than year one (2022), given the potential for job losses.
- Job losses could impact the spending of the middle-tier consumer, which seems to be hurting the most. Lower-tier consumer trends could remain unchanged, given rising wages and job availability.
- Higher-income consumers are less likely to be impacted by short-term macro changes, especially for essential items.
- Due to its defensive product mix and sharp price points, Walmart remains well-prepared to manage challenging economic trends, including recession.
- Longer term, Walmart plans to continue to capitalize on its opportunity to add value, grow the assortment (primarily through its marketplace), enhance the customer experience, and reduce friction across the business.
- The company also continues to expand its vision beyond retail and e-commerce, focusing on building a robust ecosystem, including advertising, merchant services, last-mile delivery, health services, and digital payments.
- These new ecosystem elements are more profitable than traditional retail and should strengthen Walmart's relationship with customers and generate good market share gains.
- Price Action: WMT shares traded lower by 1.29% at $144.78 on the last check Thursday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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