Wal-Mart (WMT) Moves Higher After Citigroup Says Buy, Buy, Buy

Shares of Wal-Mart (NYSE: WMT) were the talk of Wall Street today after Citigroup upgraded the bluechip stock from Hold to Buy, and increased their price target to $65 from $54.

Citi sees WMT putting on the gloves and willing to win the price war in food retail. They note that WMT might be losing the customer that they gained during the recession, when they posted a decrease in customer traffic from Q409. This might signal price alone as not matching the convenience of shopping in the supermarkets. Citi believes that Wal-Mart will ramp up rollbacks even more to combat this phenomenon.

Citi notes that same store sales at stores with "both Clean Action Alley and the Smart Network are outperforming the company average as well as stores with only one of these initiatives. Customers are finding it easier to navigate the store, which is leading to larger basket sizes and higher ticket."

WMT's new apparel team, with eight new VPs and SVPs, will help WMT to capitalize on the sales and margin opportunity as early as H210.

Finally, Citi is raising their FY10 EPS estimate to $4.04 from $4.00 previous. They see SSS increase 1.9% now versus 1.3% prior. Their $65 price target is based on 16x FY10 P/E.

Shares of Wal-Mart are up 2.92 percent to $55.47 in after-noon action.

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