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Target and Walmart Rated Neutral at Piper Sandler on Macro Headwinds

Stock Markets Jul 22, 2022 10:44
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By Sam Boughedda

In a wide-ranging note on lifestyle brands, retail and digital disruptors, Piper Sandler started coverage of Target (NYSE:TGT) and Walmart (NYSE:WMT) with Neutral ratings.

Piper Sandler set a price target of $190 per share on Target and $135 per share on Walmart stock.

On the market as a whole, an analyst at Piper Sandler said, "intensifying macro pressures, unpredictable spending shifts, and the ongoing balance between digital and physical sales reminds us of our favorite Wilson Philipssong – Hold On. Our almost two decades of consumer/tech equity research experience focuses on what margin structures and share gains can companies Hold On to (and drive outperformance) versus reversion to the mean. A return to stores has been a post-COVID surprise, and we think that a focused store fleet will be critical for new customer acquisition. With our core brands/retail coverage down 20% (simple average) and disruptors down 63% YTD, we remain selective, but believe we are approaching broadly attractive entry points."

The analyst stated they remain Neutral on Target and Walmart given potential near-term macro headwinds.

Focusing on Target, the analyst said they think "private label brands and same day services are a competitive differentiator and should help TGT capture share in grocery."

Meanwhile, on Walmart, the analyst stated, "excess inventory remains a pressure point, and inflationary pressures could compress grocery margins."

Target and Walmart Rated Neutral at Piper Sandler on Macro Headwinds
 

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