Walmart (WMT) - Get Report is well positioned to weather the coronavirus storm, according to Oppenheimer analysts, who raised their rating on the No. 1 retailer to outperform from market perform with a $125 price target.
The target indicates 17% potential upside from the stock's Monday closing price of $106.76. In Monday's massive market selloff, the stock gave up 6.4%, At last check they rebounded 6.5% to $113.66.
Analyst Rupesh Parikh said the Bentonville, Ark., company's 11% pullback since March 10, vs a 17% decline in the S&P 500, is an attractive entry point as the company still has "attractive relative financial delivery" that could drive stock outperformance.
Walmart "is well positioned to still deliver on financial targets, and [the] shares could benefit from money flows shorter term as investors likely continue to seek safety in a more uncertain global economic backdrop," Parikh said.
The firm's bullish view is driven by several factors including its expectation that the company's fiscal 2020 financial targets are still achievable. He says that Walmart's size enables it to better manage fluctuations than other retailers, and that the company's shares historically have outperformed during recessions.
Oppenheimer notes that grocers are one of the biggest beneficiaries from the global fight against the coronavirus pandemic.
"We expect a meaningful moderation in consumer spending near term, but we are less clear how long it lasts," Parikh said.
"The U.S. government likely initiates economy stimulus, which could also help the WMT consumer manage through adverse impacts."