Walmart shares should be worth $160: Evercore ISI

March 30, 2023

Walmart Inc (NYSE: WMT) still trading near the same price at which it started the year is an opportunity to build a position in a high-quality retail stock, says Greg Melich of Evercore ISI.

Walmart shares to benefit from normalising inventory

Melich upgraded the chain of hypermarkets to “outperform” this morning and said the stock could climb to $160 – an 11% upside from here.

Normalising inventory, he said today in a research note, will be a meaningful catalyst for Walmart shares moving forward. Melich added:

Management’s diligent work to pivot the business to omnichannel, divest non-core assets, and invest in productivity has positioned traffic and margins for upside over the next two years.

Walmart Inc is expected to earn $1.3 a share in its current financial quarter – roughly the same as last year. Last month, it agreed to sell Moosejaw to Dick’s Sporting Goods as Invezz reported HERE.

Walmart Inc is well positioned to gain market share

According to Greg Melich, economic uncertainty spells opportunity for Walmart to expand its customer base. Walmart+ platform, he expects, will help the retail behemoth engage higher income households as well. The analyst wrote:

Traffic turn appears to be building, and with consumers across the demographic spectrum making wallet allocation choices after several years of record nominal retail spending, Walmart is poised to regain share.

Melich is convinced that Walmart will manage to expand its margin despite a challenging macroeconomic backdrop, thanks to its fortress of a balance sheet, its scale and stability.

Walmart shares currently pay a dividend yield of 1.57% that isn’t particularly exciting but makes up for an additional reason to own this stock.

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