An analyst has increased the price targets for Walmart (WMT) and Costco (COST) ahead of their upcoming earnings announcements, indicating positive sentiment around both stocks as they approach key buy points.
According to Bernstein analyst Zhihan Ma, Walmart’s price target has been elevated to $145 from $134, maintaining an outperform rating. In her industry analysis, Ma anticipates contrasting results for different consumer segments. She notes that stimulus initiatives have the potential to enhance sales momentum for retailers catering to higher-income customers. However, those selling to lower-income consumers may struggle due to rising fuel costs, inflation, and reductions in aid programs, possibly impacting foot traffic and overall sales.
Analysts surveyed by FactSet forecast Walmart’s earnings to reach 66 cents per share for the quarter ending in April, reflecting a year-over-year increase of 7.8%. Sales predictions stand at approximately $174.646 billion, an uptick of 5.5%. Walmart’s earnings report is slated for May 21, before the market opens.
Similarly, Bernstein has increased its price target for Costco from $1,170 to $1,192 while also maintaining an outperform rating. Conversely, the firm reduced its target for Dollar Tree (DLTR) from $117 to $115, sticking with a market perform rating. Dollar Tree is set to report its fiscal first-quarter results on May 28, with a Composite Rating of 25.
Costco is expected to announce its quarterly earnings after market close on May 28. Analysts estimate earnings at $4.97 per share, marking a substantial 16.2% year-over-year growth, with sales projected to escalate by 10% to $69.497 billion.
In terms of stock performance, Walmart is currently forming a cup-with-handle base and is approaching a potential buy point around $132.46. However, the relative strength line is not keeping pace with the stock price, which could hinder potential gains from a breakout.
Walmart boasts a Composite Rating of 64, along with a 21-day average true range (ATR) of 1.93%. The ATR serves as a measure of a stock’s price movement, indicating that Walmart is demonstrating stable price behavior without excessive volatility.
On the other hand, Costco attempted to break out of a flat base recently but reversed course, falling back into the pattern. Investors should watch for new breakout opportunities above $1,031.27, the high from May. Costco maintains a solid Composite Rating of 80 and an ATR of 1.81%.
Dollar Tree, however, has been on a downward trend since January, currently trading below both its 50-day and 200-day moving averages, with a relatively high ATR of 4.03%, suggesting increased price fluctuations.
In summary, while Walmart and Costco exhibit strong potential as they approach earnings reports, Dollar Tree faces challenges that could weigh heavily on its performance. Investors should closely monitor these developments for strategic positioning.
