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- Morgan Stanley analyst Simeon Gutman reiterated an Overweight rating on Walmart Inc WMT with a price target of $160.
- Gutman highlights that Walmart is hosting an Investment Community Meeting on April 4-5.
- In his view, EPS visibility is solid; he estimates 45 bps of gross margin "conservatism" in WMT"s FY24 guide in a March 26 note titled "Walmart Inc: It's Showtime."
- Also Read: Walmart Starts Making Inroads In Amazon's Forte By Transforming Business Model; Targets Affluent Customers
- The stock has lagged, but defensives could outperform from here, and Simeon believes the additional quantitative building blocks to margin expansion discussed at the Meeting should be positive.
- The analyst writes that the Investment Community Meeting will be a positive catalyst as WMT reframes its algorithm to 4% sales growth, 5-10 bps of annual EBIT margin expansion (~5-7% EBIT growth), and high-single-digit EPS growth.
- The incremental margins should improve across the entire sales base (leveraging the past decade of omnichannel investments), leading to faster growth.
- The analyst notes that opportunities to learn more about Sam's Club and Flipkart, PhonePe membership, and trajectory (alongside incremental disclosures) could add value to a SOTP framework.
- Price Action: WMT shares traded higher by 1.75% at $144.28 on the last check Monday.
- Photo via Wikimedia Commons
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