uploads///WMT STOCK

Here’s Why Walmart Stock Is Trading at Record Levels


Nov. 20 2020, Updated 1:50 p.m. ET

Goldman Sachs upgraded Walmart stock

Walmart (WMT) has a lot to celebrate. The company’s stock is trading at record highs thanks to its healthy sales growth and its ability to maintain market share despite heightened competition in the grocery space from Amazon (AMZN) and deep discounters including Aldi and Lidl. Meanwhile, the company’s growth initiatives including the strengthening of its digital business, store remodeling, multi-channel offerings, and supply-chain reinvention have been gaining ground and bode well given consumers’ changing preferences.

Adding to the positives, Goldman Sachs upgraded Walmart stock to “buy” from “neutral” and increased its price target to $117 from $115. Moreover, it added WMT stock to its “Conviction List.”

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Analyst Matthew Fassler with Goldman Sachs stated that Walmart’s core business remains strong. Meanwhile, the recently enacted tax reform bill should support the company’s earnings growth owing to the significant tax savings. Moreover, the lower tax rate should further allow the company to pursue its growth initiatives and boost shareholder value through higher dividends.

The tax reform bill and strong holiday sales results have led analysts to upgrade their view on retail stocks or at least increase their price target. Recently, Barclays upped its outlook on retailers (XRT). Citing the benefits from significant tax savings, Barclays analyst Matthew McClintock upgraded Target (TGT) stock from “underweight” to “equal weight” and doubled its price target.

The analyst added that the tax reform bill positions retailers well to compete against Amazon by providing enough room for them to pursue growth measures and cushion their bottom line. Barclays also upgraded Lowe’s (LOW) stock and raised the target price on several others including Best Buy (BBY), Home Depot (HD), and Nike (NKE) among others.

One-year stock price movement

Walmart stock has gained about 52.4% in the past one year and has significantly outperformed its peers and the benchmark index. During the same time, stock prices of Costco (COST) and Target (TGT) have witnessed an increase of 21.6% and 9.8%, respectively. Meanwhile, the S&P 500 Index (SPX-INDEX) rose 23.4%.


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