Goldman Sachs: Wal-Mart's Progress Impresses, But It's Time For A Pause

Wal-Mart Stores Inc (NYSE: WMT) has stood its ground against e-commerce and discount rivals that are trampling retail peers.

It’s survived toy competitors, clothing competitors and grocery competitors. It’s earned Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG)’s backing. It’s struck all-time highs.

But some on the Street think it’s about time for a breather.

The Rating

Goldman Sachs analyst Matthew Fassler downgraded Wal-Mart to Neutral while raising the price target from $91 to $100.

The Thesis

With buffering from diversification in store sites, product categories and customer demographics, Wal-Mart has been relatively invulnerable to traditional retail woes, according to Goldman Sachs.

“It is now delivering on the promise of this positioning, holding share against broader retail — and gaining share versus most grocers and apparel retailers; returning to productivity loop dynamics; and improving its working capital efficiency,” Fassler said in a Monday note. (See Fassler's track record here.) 

In his estimation, Wal-Mart’s stock, up 39 percent year-to-date with stabilized trade trends, fully reflects its push for earnings growth and business investment in next-generation technologies and services.

Price Action

Wal-Mart’s stock fell 1.2 percent on the downgrade and traded at $96.27 at the time of publication.

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Photo courtesy of Wal-Mart.