Why UBS Cut Its Estimates For Wal-Mart (WMT)

NEW YORK (TheStreet) -- UBS has cut its estimates for the world's largest retailer Wal-Mart (WMT) following its recent quarter. The investment firm reiterated a "buy" but downgraded its price target to $86 from $87.

"Growing revenues is the most important objective. Success in revitalizing sales growth should unlock valuation upside. eCommerce and small formats will be the key growth drivers in the US long-term, and WMT continues to invest behind those drivers," wrote analyst Jason DeRise in the report. 

While UBS remains confident in Wal-Mart's growth trajectory, lower-than-expected guidance for fiscal 2015 caused it to cut its earnings estimates. 

For fiscal 2015, UBS downwardly revised its earnings-per-share estimate to $5.32 from $5.54, fiscal 2016 to $5.91 from $6.16, and fiscal 2017 to $6.55 from $6.74. 

Analysts surveyed by Thomson Reuters anticipate earnings of $5.37 a share in fiscal 2015 and $5.81 a share in fiscal 2016. 

Must Read: Wal-Mart Reports Q4 Results

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TheStreet Ratings team rates WAL-MART STORES INC as a Buy with a ratings score of A-. The team has this to say about their recommendation:

"We rate WAL-MART STORES INC (WMT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."

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