Wal-Mart (WMT) PT Raised to $116 at Deutsche Bank

November 15, 2018 1:16 PM

Deutsche Bank analyst Paul Trussell raised the price target on Wal-Mart (NYSE: WMT) to $116.00 (from $112.00) while maintaining a Buy rating.

Trussell commented, "Although the 3Q print lacked the wow factor of last quarter, WMT met high expectations, in our view, with in-line revenues and a beat and raise on the bottom line. Importantly, the 3.4% US comp (DB 3.5%, Street 3.1%) equated to a two-year stack comp of 6.1% similar to 2Q’s 6.3% and well above 1Q and last year at 3.7% and 3.4% respectively. Key contributors to top-line gains were grocery which rose LSD and had the best 2-year stack comp in nine years and e-commerce which grew 43% YOY and added 140 bps to U.S. comps. Walking down the P&L, we were pleased to see EBIT dollar growth in the U.S. and on a consolidated basis as the company further showcased its ability to leverage expenses following multiple years of investments. We expect bears to focus today on a shortfall of comps to a high buy-side bar including moderating traffic, ongoing GPM pressure, and an expensive valuation but we remain quite comfortable with our bullish thesis as market share gains persists, digital growth is robust and best-in-class, and 4Q guidance seems conservative (implies ~2% comp in 4Q). Of note, little detail was provided on Flipkart, other than a statement that results were included for 44 days of the quarter and drove significant operating income dilution in-line with expectations."


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