Buckingham Research Maintains a 'Neutral' Rating on Wal-Mart (WMT), See Upside/Downside Fairly Balanced

January 8, 2009 4:04 PM EST

Buckingham Research maintains a 'Neutral' rating on Wal-Mart (NYSE: WMT).

Buckingham analyst says, "After beating and raising guidance on several occasions over the past year WMT stumbled in 4QFY08. The company got too optimistic on sales and apparently something else is occurring on the expense line. Sales weakness in international markets is likely to continue, in our opinion, and the company is not sharing details as of yet regarding its expense issues. This suggests that estimates need to come down at least a little for next year. Further, we already believed that next year Street consensus figures were too high as we doubt they fully reflected the impact of the stronger US dollar. We are trimming our estimates further and now are at $3.50 for next year (3% annual growth on top of an 8% increase in FY08). This figure is $0.21 below the previous consensus."

"We suppose that the promise of lower gas prices and stimulus action will get WMT shares going again and we continue to like the company’s defensive positioning and low-price franchise in this economy. However, with the miss to 4QFY08 guidance we are less convinced that execution is as stellar as investors had believed prior to today."

Wal-Mart Stores, Inc. (Wal-Mart) operates retail stores in various formats around the world.

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