Wal-Mart (WMT) PT, Estimates Raised at Nomura on Strong Quarter

Nomura Securities analyst Robert Drbul reiterated a Buy rating and raised his price target on Wal-Mart (NYSE: WMT) to $81.00 (from $70.00) following strong results.

Drbul commented, "Revenue increased 0.9% to $115.90bn (+4.0% in CC). Walmart U.S. comps increased 1.0%, above our expectation for +0.5%, incl. 1.5% traffic growth (vs. TGT's +0.3% traffic in 1Q). We are encouraged by momentum in the U.S. business, with 7 straight quarters of positive comps and 6 straight with pos. traffic. On a 2-yr basis, comp traffic rose +2.5% (up from +2.1% in 4Q). We view the WMT U.S. comp result positively in light of both the challenging retail environment, and more specifically, deflationary trends in food (-60bps hit to WMT US comp in 1Q). We were also encouraged by the +LSD comp in General Merchandise, despite AMZN's 32% NA E&GM growth in 1Q16. Global e-commerce sales decelerated slightly to +7% in 1Q from +8% in 4Q (in CC), reiterating the need for ongoing heavy investment to better position the company in a rapidly evolving environment. We remain encouraged by the expansion of online grocery (40 mkts by end of month) and new e-comm dedicated FCs (2 added in 1Q). We believe online grocery is defensible and strategic for Walmart from both a logistics and core competency standpoint."

The firm raised FY16E EPS from $4.15 to $4.30; FY17E EPS from $4.35 to $4.45.

For an analyst ratings summary and ratings history on Wal-Mart click here. For more ratings news on Wal-Mart click here.

Shares of Wal-Mart closed at $69.20 yesterday.

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