Walmart, climbed in premarket trading Friday after MKM Partners analyst Bill Kirk said the bargain retailer is "doing the most, but getting the least credit."
He upgraded his stock to a buy rating and boosted his price objective to $166 from $156.
Kirk stated that Walmart has superior inventory levels heading into the holidays, that some trends are increasing while others are stagnant, and that the company is "ideally positioned" if consumers become more price discriminating as a result of rising food and energy prices.
Walmart reported fiscal third-quarter earnings that were above expectations, but the stock has been down roughly 2.6% in the last three days, owing to concerns about gross margin pressures. MKM's Kirk is unconcerned, claiming that while Walmart is diversifying away from food, it is still gaining market share against grocery competitors. In a letter to clients, Kirk wrote,
"Commentary on expanding price discrepancies and not completely passing on inflation should alarm rival grocers but will be a boon to Walmart, particularly if the consumer becomes more value-conscious."
Walmart's stock has dropped 4.6% in the last three months, while the Dow Jones Industrial Average DJIA, has increased by 2.8%.