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Why April 1st Could Be Big For Walmart

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In a report published Friday, Gilford Securities analysts maintained a Buy rating on Wal-Mart Stores Inc (NYSE: WMT) from Outperform to Market Perform, while maintaining the price target at $36.

The analysts expect the company's EPS growth in 2015 to be weighed down by wage increases, currency translation issues and e-commerce related costs. Wal-Mart shares are unlikely to appreciate significantly "until there are reasons to believe prospects will brighten." This may occur on April 1st, in view of the plans announced by Walmart to "run better stores in the US and enable consumers to shop any way they wish," the report mentioned.

"For the first time in about 10 years the company and US Walmart are run by executives with experience in operating stores. This is making a discernible positive difference in the business," the analysts added.

Gilford Securities expects Greg Foran, who heads US Wal-Mart, to announce expansion plans as well as changes to enhance service and assortments in stores. The discussion is likely to focus on how Wal-Mart seeks to gain market share "the old fashion way," by opening several new stores and improving the merchandising and customer service in its existing ones.

"It will become clear, we believe, that having shopkeepers at the helm will increase the potential for increasing US Walmart's sales and profits. We anticipate hearing of plans to open Neighborhood Markets at a faster pace, to roll out Click & Collect sites for pickup of digital orders, and to expand home delivery of food in metro areas and small towns," the analysts said.

Not many food and general merchandise retailers have pockets deep enough to match Wal-Mart's investments into integrating stores and digital retailing and to open new stores. "We believe a big part of Walmart's payoff within the next several years will come from a shakeout of marginal food chains and general merchandise retailers unable to make a complete transition to the digital era," the analysts wrote.

Latest Ratings for WMT

DateFirmActionFromTo
Feb 2022Morgan StanleyMaintainsOverweight
Feb 2022Raymond JamesMaintainsOutperform
Feb 2022Deutsche BankMaintainsBuy

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Posted-In: Gilford SecuritesAnalyst Color Reiteration Analyst Ratings

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