Walmart Stores Receive A Downgrade From Merrill Lynch Analysts

The analysts at Merrill Lynch have downgraded the stock of the retail giant following a bearish guidance report for the next three years

Wal-Mart Stores has been presented with a downgrade rating from the analysts at the Wall Street Journal, which has hurt investor sentiment on a huge level. At first the WSJ analysts were alone in suggesting a dip in the rating, but recently it was seen that equity giant Merrill Lynch also gave a downward guidance for the stock of the retail giant and ended up giving it a ‘neutral’ rating to the stock. In the past, the price target that the giant received from the same analysts came around at $85, whereas the most recent target has now been recorded at $65, which is a change that has made the investors quite over to the bearish side towards the stock.

This major setback which Wal-Mart stock has received from the analysts has been generated due to the negative guidance report which the giant has announced to its investors in a press conference convened in the start of the week. The retail company’s management was seen to announce in the conference that the earnings per share that it will be recorded in the next two years is to stay under constant pressure, mostly because of the ups and down in the investments being made in the company. One of the main reasons for the lower EPS estimations is to cover up the lack of investments being made, as well as in the change of people’s demand and prices of different goods. For the next financial year of 2016, the EPS has been predicted to be around $4.40 whereas for FY17, the EPS is to come around $4 as expected by the analysts on the whole.

According to the guidance report given by the Wal Mart stores, the giant is to experience a massive blow in earnings in the next two years, but there still are expectations of growth for 2018. Even though analysts in the market are of the opinion that a lot of improvements can be included on the whole, which can be driven from better sales of its products, while on the other hand, the giant’s management thinks differently. As per the report that was released recently, the retail firm reported that it has a lot of plans of growing its stores by opening up new franchises, which will automatically need new employees, which is why it is not expecting a lot of earnings growth for a couple of years now. The analysts maintain their neutral rating on the stock of the company.