According to KeyCanc, retailers Walmart and Target are in a strong position to boost investors’ portfolios. On Tuesday, the company began covering both retailers with redundant ratings and price targets that signal potential future market share growth. KeyBanc gives Walmart a $155 price target, implying a gain of more than 14%, and a $200 Price Target, meaning the stock could rise more than 20%. KeyBanc Capital Markets analyst Bradley Thomas writes: “While investors may find better growth potential in smaller companies, we believe both Walmart and Target are in a competitive position. the best competition of the past decade, as the catalyst of the e-commerce pandemic becomes significantly more important.” . Additionally, both companies will enjoy favorable equity returns from smaller companies over the next two to three years if they continue to capitalize on their grocery delivery and pickup businesses, Thomas writes. “Ultimately, our OW rating is underpinned by the outlook for defensive growth, equity returns, and a return to normal earnings,” said Thomas. Margins are back to normal Both companies made way too much during the pandemic but are currently earning less than they used to be, due to inventory issues stemming from their businesses. supply chain problem. Walmart’s latest earnings beat Wall Street expectations at top and bottom profits, but the company cut its profit outlook, arguing that consumers are exhibiting weaker spending habits due to inflationary. Target’s most recent earnings took a hit as the company slashed prices to clear excess inventory. However, the company kept its own full-year outlook and said it was resilient. Going forward, however, margins should begin to normalize for both companies, Thomas said. There was also positive data signaling a better third quarter for both companies after a tough second-quarter earnings. While consumers may reduce spending next year due to recession fears, back to school is looking solid for Walmart and Target according to geolocation and credit/debit card data by KeyBanc. “Both companies were able to live up to expectations in Q3, with the worst possible discounts on our backs,” Thomas said. Target stock has been struggling in 2022, losing 28.2% in 2022. Walmart’s stock has been much better during that time, though it’s still down 6.6% from last year. — Michael Bloom of CNBC contributed reporting.
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