Wal-Mart shares are up 16 percent so far this year, but one analyst says the stock has more room to run, and he cited 10 reasons to support his position.
After the company's annual shareholder meeting in Fayetteville, Arkansas, last week, Jefferies analyst Daniel Binder on Monday upgraded the retailer's shares to "buy" from "hold," saying changes at the world's largest retailer are starting to take hold. He likewise lifted the price target to $82 from $60 for the company's stock, on the premise that further opportunity lies ahead. Wal-Mart shares were recently trading around $71.
"Based on our store checks and survey work, we believe Wal-Mart's store investments are yielding broadly improved store conditions and first-quarter sales results seem to confirm this," he told investors. "We think this improvement will be longer lasting and should lead to upside in sales and an upward earnings per share revision cycle."
However, not every analyst came away from Wal-Mart's meeting with such robust confidence. In a separate note to investors Monday, Cowen & Company analyst Oliver Chen reiterated that he needs to see more evidence of a sustained turnaround before he would upgrade the company's shares from his current "market perform" rating.
As for Binder, here are the top 10 reasons why Wal-Mart stock is a buy.
1. Its investments are bearing fruit
The dedication of $2.7 billion toward training employees and paying them higher wages; putting money toward its online operations; and cleaning up its stores are all driving sales momentum. But Binder said they could contribute to an even bigger top-line lift moving forward.