Barclays Cites 'Absence Of Near-Term Catalysts' In Wal-Mart Downgrade

In a report published Friday, Barclays analyst Meredith Adler downgraded shares of Wal-Mart Stores, Inc. (NYSE: WMT) to Equal-weight from Overweight with a price target lowered to $85 from a previous $90 as the company is unlikely to see benefits from its investments in higher wages and training in the near-term.

"In the near-term, Wal-Mart is unlikely to see benefits that offset the higher expenses, especially since these investments will continue into fiscal 2017," Adler wrote. "In addition, the acceleration in U.S. comps in 4Q15 was primarily a result of lower gas prices and easy weather comparisons."

Adler said that weather is "unlikely" to be a help in fiscal 2016 and lower gas prices will be lapped starting in July or August. In addition, Wal-Mart continues to invest in its e-commerce business, yet sales growth has "moderated" while not pulling any other levers such as a stock buyback that could offset these hits to earnings.

However, Adler noted that investors with a longer time horizon could benefit as lower-income consumers increase their spending due to higher minimum wages or more rapid job growth while the company's spending should moderate over time.

Bottom line, Adler suggested that shares demonstrated a "good run" since October 2014, but now lack any positive near-term catalysts that can move the stock even higher.