Wal-Mart (WMT) Rally Due for a Pause - Morgan Stanley

Morgan Stanley analyst Simeon Gutman believes Wal-Mart (NYSE: WMT) rally is due for a pause as its multiple is now in-line with the market. The firm reiterated an Equalweight rating and price target of $67.

Gutman notes shares are up 20% YTD and have outperformed the market by 13% over the past two months. Its P/E multiple now stands at 17.5x FTM estimates, inline with the market.

In a less macro-driven tape, WMT should be trading at a discount to the market given its lackluster earnings growth. However, the global macro backdrop is unstable and it appears WMT is being treated as a "safe haven."

WMT has historically traded at a 14-15x P/E multiple over the last 10 years, which seems more appropriate given its growth prospects, the analyst said.

Looking at a market cap weighted basis, WMT trades at a discount to the average of a group of large-cap consumer staples companies (KO, PEP, NWL, PG, and CL)

For an analyst ratings summary and ratings history on Wal-Mart click here. For more ratings news on Wal-Mart click here.

Shares of Wal-Mart closed at $73.84 yesterday.

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