As second wave COVID uncertainty has ramped up, investors are seeking more security in their assets. With this in mind, Wall street pros are growing more bullish on Walmart’s (WMT) prospects, in both the short and long term, thanks to its ongoing initiatives and current competitive positioning.
Count Oppenheimer analyst Rupesh Parikh among the bulls. Since the 5-star analyst has upgraded his rating on WMT to Buy at the onset of the pandemic, the stock has climbed 30%. At the time, Parikh turned bullish on Walmart because of its rapidly growing e-commerce business and history of stability during US recessions. Not only do these factors still apply today, but the company is also eager to build off its recent strong financials and reap the benefits of newly introduced Walmart+.
As the world’s largest retailer, revenue expectations are high. Nevertheless, Walmart was able to beat consensus earnings in Q2 and stay in line with traditional growth. Furthermore, the retail giant successful transitioned to a predominately e-commerce-focused Q2 and was able to satisfy customer needs at home and in stores.
Moving forward, online ordering will only become more seamless, as the company officially launched Walmart+ on September 15. Walmart+ is a $98/year subscription that offers customers unlimited free delivery for all products as well as same-day grocery delivery, among other benefits. The program was created to maximize convenience and directly compete with Amazon’s Prime service.
Walmart+ could prove to be one the firm’s vital resources for a long time to come, complementing its already-impressive quality controls. What currently distinguishes Walmart from other e-commerce platforms is that the company claims and reviews all of its inventory before shipping. Employees ensure that the products meet quality standards, unlike Amazon, which connects unregulated third-party sellers with buyers. These controls may soon serve as a source of competitive advantage for McMillon & Co. in an e-commerce market expected to grow steadily through 2025.
In an ever-unstable macroeconomic environment, WMT boasts numerous catalysts for success. Its e-commerce business has grown substantially in only a few years and is well-suited to accommodate new users. The company also announced its intention to acquire a 7.5% stake in TikTok, which will help grow its third-party marketplace and advertising revenues. Finally, Walmart has demonstrated its ability to maintain success both during the peak of the pandemic and throughout previous recessions. Together, these factors make the stock quite an attractive purchase.
Overall, the retail giant remains a Wall Street darling, as TipRanks analytics showcasing WMT as a Strong Buy. With an average price target of $149.20 analysts are expecting a 9% upside from current levels. In total, WMT stock has received 21 ‘buy’ ratings vs. 7 ‘holds’ in the past three months. (See WMT stock analysis on TipRanks)
