Mizuho starts coverage on retailers, prefers Walmart over Costco, Target

Investing.com -- Mizuho Securities started coverage of major U.S. retailers with a preference for Walmart (NYSE: WMT) over Target and Costco (NASDAQ: COST) citing Walmart’s more advanced transformation, broader earnings power, and greater resilience to economic headwinds.

Analysts initiated Walmart with an “Outperform” rating and a $105 price target, calling it a “must-own name” in consumer.

The multi-year investment cycle is now bearing fruit, the analysts at Mizuho say, highlighting Walmart’s shift toward higher-margin businesses like advertising, membership, and marketplace sales.

Mizuho sees these segments driving earnings beyond $4 per share by FY30.

By contrast, Target was initiated at “Neutral” with a $92 target, as Mizuho flagged execution risk, ongoing margin pressure, and a still-uncertain recovery in discretionary categories, about half of Target’s mix.

Stable comp sales are the missing ingredient, analysts noted, pointing to weak early-year trends and potential tariff exposure on roughly 50% of goods.

Mizuho’s FY25 earnings forecast of $8.80 sits below both company guidance and consensus.

Costco also received a “Neutral” rating with a $975 price target.

While Mizuho praised its strong fundamentals, resilient comps, and expanding digital strategy, it cited valuation concerns.

At nearly 50 times forward earnings, analysts questioned whether recent growth initiatives will flow to the bottom line or simply be reinvested.

We opt to show some valuation discipline and await a more opportune entry point, they wrote.

With Target’s turnaround still evolving and Costco’s stock seen as fully valued, Mizuho favors Walmart for its “complete package” defensive positioning, improving profitability, and exposure to higher-income consumers.

WMT shares can still work in a lukewarm economy, according to the analyst at Mizuho analysts.

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