Analysts Debate Whether Wal-Mart Boom Will Continue


Fifty years after Wal-Mart Stores opened its first retail location, its shares hit a new all-time high on Monday. Despite this jump, two analysts were divided over whether the stock still had room to rise.

In an interview with CNBC’s “Squawk on the Street,” Robert Carroll, a retail analyst at UBS, said the stock was close to fairly valued. Carroll has a “neutral” rating, with a $69 price target for the stock.

Carroll added that consumers are viewing the company differently than they have in years past, when same-store sales were negative.

“It’s really been that turn and their return to the core competency on price that leaves them well situated, but we just think right now it is still fairly valued until it can get a next leg of growth coming on top of that from either an uptick in square footage growth or even further expansion of some of the smaller format stores that they’ve been exploring,” he said.

Although Deborah Weinswig, a retail analyst at Citi, characterized last quarter as a “perfect environment for spending” due to warm weather, many retailers spent heavily on technology, which impacted their bottom line. This led to disappointment among analysts.

Weinswig has a “buy” rating on the shares, with a $78 price target.

She forecast that Wal-Mart would post better second-quarter earnings as it concentrates more on hard-line items, sporting goods, and apparel.

“We’ve seen improvement in both traffic and ticket, but I think what we’ll start to see in the second quarter is really margins play out for them, and they’ve had this big focus on investing back in price and so I think we’ll see the second quarter will really be an inflection point for them and should play out in the stock price, and it’s the reason we raised our price target to $78,” she said on “Squawk on the Street.”

—BY’s Katie Little

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UBS Securities makes a market in the securities and/or ADRs of Wal-Mart Stores. Citi has an investment banking relationship with the company.



Follow Katie Little on Twitter @katie_little.