Jefferies analyst Stephanie Wissink says the retailing giant’s subscription service Walmart+ and potential TikTok ownership could strengthen its digital platform and customer loyalty.
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Walmart stock had a great 2020, but shares have edged up just 0.5% in 2021 so far, as investors question whether the retail giant can keep the momentum going. Jefferies argues that the retailing giant’s only just getting started.
Analyst Stephanie Wissink reiterated a Buy rating on Walmart (ticker: WMT) and $177 price target. She writes that 2021 “has the makings of a transformational year,” and there’s growing support for her blue-sky scenario target of $200 as the company’s value compounds.
She highlights Walmart’s “ability to leverage proximity to consumers and scale advantages into a more comprehensive ecosystem with omnichannel adoption,” while subscription service Walmart+ and its potential TikTok ownership strengthen its digital platform and customer loyalty.
While many consumers will still choose to shop in-store, the convenience of new services such as curbside pickup is clear, and that’s a plus for Walmart. Not only does their network of stores put them near many Americans, but pickup—which doesn’t require the organization of last-mile shipping—is more margin friendly than traditional e-commerce.
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Wissink argues that the company’s investments in labor and store-based fulfillment meant that it was able to easily transition to an online and omnichannel model during the Covid-19 pandemic, laying the groundwork for ongoing growth and better profitability. She’s upbeat about the company’s growing third-party marketplace, as well as the way that Walmart can leverage Walmart+ into more-frequent consumer purchases.
Although Walmart’s TikTok deal is pending, she believes it’s an attractive platform for the company to “capitalize on social commerce,” including purchase through social media companies, a rapidly expanding channel that’s growing twice as fast as overall retail e-commerce. Wissink also thinks that Walmart can capture lost grocery market share as it improves inventory and shopping patterns normalize.
Walmart is edging up 0.1% to $145.03 in recent trading. Wissink’s endorsement of the company’s omnichannel potential comes a week after the departure of its e-commerce chief Marc Lore, whom many credit with the success of its strategy.
Write to Teresa Rivas at [email protected]
