is edging higher on Friday, a day after it tumbled 6.5% on a mixed fourth-quarter earnings, as investors digest the results and news from an investor-day event that followed the report.
At the gathering, Walmart management including CEO
laid out more detail about its strategy for spending, which will total about $14 billion in the current fiscal year. While it expects a year-over-year slowdown in growth given the frenzied, pandemic-related sales that marked much of 2020, the company said it is committed to being “the primary destination with customers.” It plans to do so by investing in automation and integrating more diverse services, including healthcare, finance and its third-party marketplace, into the business.
As Barron’s has previously noted, while e-commerce and new options like curbside pickup have been a boom during the pandemic, building an omnichannel sales platform and fulfilling orders isn’t cheap. That has been a barrier for many smaller players, allowing gains to flow to the biggest retailers, although these too have to spend heavily to keep up with consumers’ evolving demands.
The update did little to stem Thursday’s losses, but Walmart was up 0.3% to $138.09 in early trading Friday. Most analysts think a rebound in the stock is inevitable, and argue investors should buy the dip, even as some reduced their targets for the share price.
kept an Outperform rating on Walmart while lowering his price target to $160 from $165. The investments will allow the chain to “stay ahead of rapidly evolving consumer demands and expectations,” he wrote. “The strategy is sound, and risk/reward looks intriguing.”
Paul Lejuez maintained his Buy rating and $172 target, writing that Walmart is “an example of investments helping the strong get stronger.”
Cowen & Co.’s
reiterated an Outperform rating and $170 target. “We like Walmart’s thoughtful investments in automation, labor, and stakeholder goals,” he said. “Customer engagement will heighten as ‘omni-services’ such as healthcare and financial services grow.”
reiterated a Buy rating while lowering his target to $166 from $170. “The bear arguments are focused on the near-term,” he wrote. “The bull argument (and our thesis), however, is that Walmart is taking actions to stay ahead of the curve (and the competition) over the medium- to long-term.”
maintained an Outperform rating but lowered his target to $155 from $165. He said the increased spending is the right move, and will help Walmart increase its market share and earnings. “Accordingly, our positive thesis remains relatively unchanged, as we continue to see Walmart as a long-term winner in today’s retail environment,” he wrote.
Telsey Advisory Group’s Joseph Feldman kept an Outperform rating and $162 price target. “Walmart’s Investor Meeting increased our confidence in the company’s ability to transform and successfully operate in the competitive, dynamic, omnichannel retail (and consumer) world of the future,” Feldman said.
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