Flipkart may be topic for Walmart
Walmart Inc.’s investor day topics are likely to include updates on the Flipkart acquisition, select guidance metrics, the retailer’s e-commerce, and international strategies. In addition, management will get a shot at easing investor concerns about wage pressures and Chinese tariffs at the 2018 Meeting for the Investment Community in Bentonville, Ark., on Tuesday.
Shares of the retail behemoth have been on a recovery path for most of the year after falling more than 10 percent the day of fourthquarter earnings in February. Walmart has since pared losses to less than 4 percent and will have another chance to bolster investor enthusiasm this week.
This year’s investor day should be positive, given Walmart’s solid results from the first half of the year and a favorable macro environment, according to one Walmart bull. Telsey Advisory Group analyst Joseph Feldman expects the retailer to provide clarity on key topics such as wages, tariffs and its recent Flipkart acquisition, which is expected to post losses.
“We expect an update on the company’s exposure to China and the impact of the 10 percent tariff and expected jump to 25 percent in 2019,” Feldman wrote in a note. “We also anticipate a discussion of rising labor costs, especially in light of Amazon’s recent increase in its minimum hourly wages to $15, starting on Nov. 1.”
“In our view, this asset should pay off over time as Indian e-commerce develops, although like most ecommerce companies, this should drag results in the near term,” Feldman wrote.
Walmart is rated an outperform at Telsey, with a price target of $107.
Here’s what other Wall Street analysts are saying about the investor conference.
Oliver Chen of Cowen sees Walmart focusing on its e-commerce growth and margin management during the investor presentation.
“We forecast debates on trade-offs between share gains vs. profitability,” Chen wrote in a note. Chen rates Walmart an outperform, with a $115 price target that matches the Street high.
Walmart shares are trading at 20 times earnings versus their three-year average of 16.8 times, which implies investor day upside could be muted, Chen wrote.