Goldman Sachs says Walmart is 'in control of its own destiny' despite retail's troubles (WMT)

pulse

January 18, 2018 7:26 PM

A Goldman analyst upgraded Walmart's stock from 'Neutral' to 'Buy,' and added it to the bank's most favored stock list.

Goldman added Walmart to its "Americas Conviction List," a group of the bank's favorite stocks to buy.
Goldman said that Walmart will be a big beneficiary from the GOP's tax reform law.

Shares of Walmart popped on Thursday after it got a blessing from Goldman Sachs, which cited tax reform as a big boon for the stock.

Walmart was upgraded to "Buy" from "Neutral" and its price target was raised to $117, up 14% from current levels. The company was also added to Goldman's "Americas Conviction List," a group of the bank's favorite stocks to buy.

Though Goldman downgraded the stock last November, an improving economic backdrop is expected to support Walmart's higher valuations, especially as tax reform is fully realized,

Moreover, Fassler expects the recently passed tax reform law to boost consumers' wallets, bringing stronger income growth and spurring spending at stores like Walmart.

The corporate tax cuts and repatriation of cash from overseas could also lead to Walmart reinvesting its tax savings and delivering a higher dividend to shareholders, Fassler said. Walmart has already announced it would raise wages and issue a one-time bonus to employees last week. Fassler projects that the tax cuts should add 10% to its price/margin above the 15% in wage growth.

Walmart's stock was trading up 1.36% to $103.95 a share on Thursday afternoon. It's up 5.52% for the year.

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