Walmart shares gain the most in a week on Wednesday, Morgan Stanley upgrades stock to “Overweight”, raises price target

January 24, 2019 10:56 am

Yesterday Morgan Stanley raised its rating on Walmart Inc (WMT) from “Equal Weight” to “Overweight”, since it expects the US retailer to outperform its competitors over the upcoming several years.

The Wall Street bank also revised up its price target on the stock from $107 to $110 due to “an unprecedented commitment to cost control,” which could be of benefit to the retailer’s customers.

Walmart shares closed higher for the seventh time in the past ten trading sessions in New York on Wednesday. It has also been the sharpest daily surge since January 15th. The stock went up 1.25% ($1.22) to $98.71, after touching an intraday high at $99.32, or a price level not seen since December 3rd ($99.59).

Shares of Walmart Inc have risen 5.97% so far in 2019 compared with a 5.26% gain for the benchmark index, S&P 500 (SPX).

In 2018, Walmart’s stock retreated 5.67%, thus, it again outperformed the S&P 500, which registered a 6.24% loss.

“At face value, Walmart doesn’t fit neatly into the framework we are recommending in 2019 as we model EPS declining in the low single digit range and its about 20x P/E multiple is above historical levels,” Morgan Stanley analyst Simeon Gutman wrote in a client note, cited by CNBC.

“However this is misleading, as both the EPS decline and inflated multiple are attributable to Walmart’s acquisition of Flipkart in 2018.”

“In contrast, we believe Walmart U.S. (the main driver of the stock) will be one of few retailers to grow earnings in 2019,” the analyst noted.

According to Gutman, Walmart could earn $4.80 per share during the current year and $4.74 per share in 2020.

According to CNN Money, the 29 analysts, offering 12-month forecasts regarding Walmart Inc’s stock price, have a median target of $105.00, with a high estimate of $120.00 and a low estimate of $90.00. The median estimate represents a 6.37% upside compared to the closing price of $98.71 on January 23rd.

The same media also reported that 18 out of 32 surveyed investment analysts had rated Walmart Inc’s stock as “Hold”, while 11 – as “Buy”.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for Walmart Inc (WMT) are presented as follows:

Central Pivot Point – $96.74
R1 – $99.19
R2 – $100.66
R3 – $103.11
R4 – $105.57

S1 – $95.27
S2 – $92.82
S3 – $91.35
S4 – $89.89

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