Goldman Sachs has upgraded Walmart to buy from neutral and put the retailer on its Conviction List.
“We expect growth in disposable income to reaccelerate, helping to sustain a new plateau for consumption, with more consistent growth across verticals than we have noted in the recent low, stable growth phase of the recovery,” wrote Goldman Sachs analysts. “This forecast reflects accelerating wage and income dynamics, and additional help from tax reform.”
Goldman thinks there will be year-over-year same-store sales increases in the apparel, food and casual dining sectors, “and outright like-for-like declines at any point in the year only for department stores.” At the same time, however, the analysts warn that retail remains vulnerable to disruption. But competition from the likes of Amazon and discounters aside, Walmart is “very much in control of its own destiny. The firm’s strategic positioning remains compelling – selling consumables to middle-income consumers in small markets.”