Nomura analyst, Robert Drbul, highlighted Wal-Mart (NYSE: WMT) as a defensive play in Retail. The company is due to report 3Q15 earnings on November 17, BMO.

He believes investments in payroll and price are necessary to improve long-term positioning, we believe Walmart is continuing to see sales gains in its U.S. business, aided by lower energy costs and improvements in lower-income customer demographics.

Expectations for the quarter include a 1.5% comp increase for WMT U.S., fourth consecutive quarter of traffic gains, total sales growth of 1.3%, softness at Sam’s Club, GM of 24.3%, and investments in labor and e-commerce to drive $0.08 and $0.02 of EPS reductions.

Sentiment and expectations are at multiyear lows and the $20bn buyback and 3.5% yield protect further downside in the shares. Drbul believes the steps Walmart is taking are both necessary and adequate for the company to improve its longer-term competitive positioning.

No change to Buy rating or $70 PT.

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Shares of Wal-Mart closed at $56.42 yesterday.