Wal-Mart is "as well positioned as any mass market retailer — in an admittedly imperfect world for mass market retailers," Goldman Sachs wrote in a note to clients Friday.
The investment bank upgraded Wal-Mart to buy from neutral, also adding the stock to Goldman's so-called Conviction List, with an $84 price target. Wal-Mart shares closed Thursday at $75.05 apiece.
Wal-Mart is prepared to "simultaneously sidestep the [Amazon] juggernaut," Goldman Sachs analyst Matthew Fassler said.
Ever since Jeff Bezos' Amazon announced plans on June 16 to acquire grocery chain Whole Foods, retailers and supermarket stocks have taken a beating, with Wal-Mart included in that group. The big-box retailer has exposure in many of the same key selling categories as Amazon.
A representative from Wal-Mart declined to comment.
Shares of Wal-Mart have fallen more than 6 percent from one month ago; Target's stock has tumbled more than 7 percent; shares of grocery chain Kroger have tanked nearly 25 percent. Amazon, meanwhile, is up about 2.5 percent.
But Fassler said that compared with other retailers, there is less risk that Wal-Mart will face competition in the grocery aisles, even with Amazon going after Whole Foods. Further, Wal-Mart "has the scale to emerge as a leading ... marketplace for third-party vendors," the analyst said.
As shoppers are choosing to ring up more purchases online, Wal-Mart has shown it's prepared to "cope" with more demand for technology and investments in e-commerce capabilities, Fassler added. Perhaps the biggest evidence of this to date was the company acquiring digital platform Jet.com in a $3 billion deal last fall.
This deal brought Marc Lore, Jet.com's co-founder, to Wal-Mart's team. Lore was also the co-founder of Quidsi, the company behind Diapers.com and Soap.com, which Amazon bought in 2010. Recently, however, Amazon decided to shutter its Quidsi unit as it failed to make money.
On Amazon's third annual Prime Day earlier this week, Wal-Mart appeared to be the retailer best prepared to battle the internet giant, Market Track found. Throughout the online shopping event, Wal-Mart had the greatest overlap in its online product assortment compared to Amazon's, Market Track said.
Retail stocks then received a little boost Thursday when Target said it was raising its second-quarter earnings forecast, with foot traffic and sales trends improving in stores. The SPDR S&P Retail ETF, XRT, had its best day of the year.
"As [Target's] positive pre-announcement revealed, the spending environment is steady," Goldman's Fassler said Friday. A spillover effect should bode well for other retail stocks.
"[Wal-Mart] has seen the world quite clearly," Goldman said. "Tactically, [Wal-Mart] has improved in-store execution visibly, tightened inventory, and kept pace with overall US retail [comparable-sales] momentum after years of lagging behind."
Shares of Wal-Mart climbed more than 1.5 percent higher Friday morning, on the heels of Target's announcement and the upgrade by Goldman Sachs.