RBC upgrades Walmart, says its 'narrative continues to shift'

  • Walmart is facing increased pressure from Amazon, as well as newer grocery entrants like Aldi and Lidl.
  • This has forced the company into an investment cycle, RBC says, which could increase the chain’s stock price.
  • The bank now has a $US96 price target for the stock, and has upgraded it to ‘sector perform.’

RBC Capital Markets has upgraded Walmart to ‘Sector Perform’ from ‘Underperform’ and raised its price target for the big-box retailer to $US96 from $US92.

Despite the upgrade, RBC’s target is still below Wednesday’s opening price of $US97.05. That caution stems from increased competition by Amazon’s foray into grocery, as well as innovation by traditional stores, and newer entrants like Aldi and Lidl.

“We still believe the company is in the midst of a multi-year investment cycle that will continue to suppress earnings growth,” analyst Scot Ciccarelli said in a note Wednesday.

“However, many changes/investments should ultimately improve Walmart’s longer-term strategic positioning and as investors increasingly view it as a Consumer Staple and a true competitor to Amazon, WMT may continue to re-rate to the upside.”

Wall Street has an average price target for Walmart stock of $US100, according to Bloomberg, just 3% above Wednesday’s opening price.

Shares are up 41.48% so far this year.

You can watch Walmart’s stock price live here>>

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.