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Barclays Analyst Says This is Why People Should Buy Walmart

Barclays believes Walmart’s (NYSE:WMT) positive sales momentum is only beginning and has reinstated coverage on the stock.

The firm has reiterated an “overweight” rating on Walmart shares and has predicted that the retail giant’s investments in improving its store experience will lead to it paying dividends.

Analyst Karen Short of Barclays wrote in a note to clients, “We believe that Walmart will be able to sustain comp gains over peers going forward. We believe this is a function of a stronger assortment, improved quality of fresh products, goals for stores to be ‘clean, fast, and friendly,’ wage increases [etc.]”

According to the analyst, same store sales for the company have outperformed the average of its industry peers by about 150 basis points over the last six quarters.

It was last month that Walmart reported better than expected results in its quarterly report. THe retailer reported its highest domestic same-store sales growth in more than 10 years for the second quarter with an increase of 4.5 percent versus the Thomson Reuters estimate of 2.4 percent.

“Walmart has regained momentum as evidenced by 15 consecutive quarters of positive traffic growth,” Short remarked. “We see further room for [the retailer’s] investments to drive comps.”

Walmart also recently announced that it has plans to roll out more grocery delivery options in order to try to reach its goal to make its at-home grocery delivery available in 100 metro areas by the end of the year.

The company (NYSE:WMT) is launching a new “last-mile delivery pilot” called Spark Delivery, which will use Delivery Drivers, Inc to help find the drivers, who will use their own cars to make Walmart deliveries.

“We are excited to partner with Walmart to allow them to focus on providing great products while we can build and support a professional driver network to focus on the delivery side of the business,” said Delivery Drivers CEO Aaron Hageman.

Walmart also recently revealed that it is now officially the largest shareholder in India’s e-commerce site Flipkart Group. The company owns roughly 77% of Flipkart, while other well-known investors, including Tencent TCEHY and Microsoft MSFT, also remain.

Short has initiated a price target on the stock at $110. It was in May that Barclays had suspended its coverage on the stock due to the firm acting as a financial advisor in a transaction that involved Walmart.

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