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On Tuesday, Deutsche Bank maintained a “buy” rating on shares of Walmart (NYSE:) and raised their price target to $190.00 from $186.00. The correction follows a period of volatility for the retail giant, with Walmart's stock hitting new highs after overcoming challenges early in the fiscal year.
Three months ago, Walmart's stock price reflected concerns about potential deflation in consumables, and in October the company experienced an unexpected drop in sales coupled with a rare margin miss. However, the company has since reported more stable sales performance and has significantly increased its share of groceries. This improvement, along with a trajectory that could make 2024 a big year for the company, contributed to the stock's recovery.
Deutsche Bank expects fourth-quarter results, scheduled to be released on Feb. 20 before the market opens, will boost confidence in the sustainability of Walmart's recent market share gains. The results are also expected to highlight the potential for retailers to capture a larger share of wallets in general merchandise.
The optimism surrounding Walmart is further supported by strategic initiatives such as new store openings planned over the next five years, ongoing store renovations, marketplace enhancements, and advancements in Walmart+ subscription services . Details of Deutsche Bank's latest research are included in the report to highlight these developments.
Despite predicting that Walmart management is likely to set conservative 2024 targets that are lower than current market expectations, the bank said this is in line with market expectations and makes its stock less attractive. I don't think so. Deutsche Bank concludes that Walmart remains an attractive investment and that earnings per share may be revised positively in the future.
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