Stifel Nicolaus raised Wal-Mart Stores Inc (WMT.N) to "buy" from "hold," saying the world's largest retailer should continue to benefit from spending by cost-conscious consumers and the company could find it easier to expand.
The brokerage said the company's square-footage growth prospects in tough-to-enter markets could see a boost from "more receptive (pro-Walmart) state and local governments, helping get more urban stores open to drive job growth."
Analyst David Schick also said his Wal-Mart Amalgamated Leading Economic Index, an index of eight economic indicators correlated to Wal-Mart's stock price, showed its largest one-month swing in 10 years, moving strongly into positive territory.
The index moving higher historically suggests a higher chance of the company outperforming when either inflation ramps, the economy slows or both forces combine in stagflation.
"We upgrade as Wal-Mart...continues long-term benefits from Project Impact merchandise presentations, and is (a) beneficiary of continued U.S. consumer adoption of private label," the analyst, who has a $62 price target on the stock, said in a note to clients.
Project Impact is a company initiative to make stores easier to navigate by reducing clutter and widening aisles.
Shares of the company were up less than 1 percent at $53.65 Wednesday in trading before the bell. They closed at $53.49 Tuesday on the New York Stock Exchange. (Reporting by Abhishek Takle in Bangalore; Editing by Mike Miller)
Source: reuters
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