Tags: wal-mart | bearish | analyst | upgrades | stock

Wal-Mart's Last Remaining Bearish Analyst Upgrades Stock

Wal-Mart's Last Remaining Bearish Analyst Upgrades Stock
(Gary Arbach/Dreamstime)

Thursday, 21 December 2017 06:42 AM

Wall Street’s last remaining Wal-Mart bear is gone.

Scott Mushkin, a Wolfe Research LLC analyst who’s had the equivalent of a sell rating on the shares since 2014, upgraded the stock to peer perform on Wednesday because of an expected spending increase in the wake of tax cuts passed by Congress.

The move followed a rally over the past two years that dispelled most skeptics’ concerns that Wal-Mart Stores Inc. can’t compete in the Amazon era.

“Tax reform is likely to accelerate growth in the near term and over time as higher after-tax income drives consumption,” Mushkin wrote in a note. Wal-Mart -- along with fellow discounter Dollar General Corp., which also received an upgrade -- “should see benefits from increased consumption from its core lower-to-middle income customers.”

Mushkin’s upgrade is the second boost for the stock this week. Citigroup Inc. analyst Kate McShane raised her rating to a buy, citing strong store traffic and an e-commerce business that’s “emerging as a true challenge to Amazon.” Wal-Mart has posted U.S. store-traffic gains for 12 straight quarters, helped by reduced prices, cleaner aisles and an improved food offering.

Since Mushkin downgraded the retailer’s shares to underperform on Feb. 6, 2014, they’ve risen 36 percent. They’re also one of the top five performing stocks in the Dow Jones Industrial Average this year. 

Of the 36 analysts who cover the world’s largest retailer, 15 recommend buying the shares and Wolfe is now among the 21 who are neutral. By comparison, rival Target Corp. has only four analysts who recommend purchasing the shares, the same number who advise selling it. That stock also has 19 neutral ratings.

Then there’s Sears Holdings Corp., which once dominated the U.S. retail landscape as Wal-Mart does today. It only has one recommendation tracked by Bloomberg: a sell from Susquehanna International Group’s Bill Dreher.

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Scott Mushkin, a Wolfe Research LLC analyst who’s had the equivalent of a sell rating on the shares since 2014, upgraded the stock to peer perform on Wednesday because of an expected spending increase in the wake of tax cuts passed by Congress.
wal-mart, bearish, analyst, upgrades, stock
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2017-42-21
Thursday, 21 December 2017 06:42 AM
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