Credit Suisse’s Edward J. Kelly expects Wal-Mart Stores, Inc. (NYSE: WMT) to provide key updates on its three-year plan when the company hosts its 2016 investor day on October 6.
Kelly maintains an Outperform rating on the company and a price target of $80.
Updates
The analyst expects Wal-Mart to focus on drivers of prolonged traffic growth given that the gas benefit is now lapping.
Kelly also expects the company to provide an update on its e-commerce strategy and outlook for price cuts, as well as an update on its international strategy and initiatives to improve its share of fresh food.
Stock Performance
“Overall, the day may present some risk to WMT's stock given the potential for a material ramp in e-commerce losses in 2017, but this concern is not new at this point,” the analyst mentioned.
Kelly also expressed concern regarding the impact of Wal-Mart’s stock on that of its competitors, such as dollar stores and food retailers, given the company’s “disruptive mindset,” which is an industry headwind.
Sustained Traffic Needed
Noting that sustained traffic gains would be critical, especially given the lack of meaningful bottom line growth, the analyst stated Wal-Mart has “outperformed staples peers from a top-line perspective despite beginning to cycle investments in customer service and tailwinds from lower gas prices.”
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