Morgan Stanley analysts weighed in with their opinions on retail giants Amazon.com, Inc. (NASDAQ:AMZN) and Wal-Mart Stores, Inc. (NYSE:WMT). Let’s jump in to see why they believe you should Buy AMZN and Hold WMT.
Following the release of AlphaWise data that showed a boom in Amazon’s grocery and clothing sales, Morgan Stanley analyst, Brian Nowak, weighed in on the stock. The analyst maintains that Amazon’s clothing and grocery categories are a 1 trillion-dollar industry, and the progress of these two sectors weigh in heavily whenever the analyst rates the stock.
The analyst explains that Amazon’s grocery user adoption is on the rise. Even though only about 12% to 18% of U.S. consumers buy groceries online, Amazon’s penetration into the online grocery market has been rising sharply. The analyst also expects that consumers will start to spend more money in the online grocery shopping market.
The analyst explains that 52% of U.S consumers have purchased clothing online in the past 12 months, and 45% of U.S consumers have purchased clothing on Amazon in the past 12 months. This number is up from 39% in 1Q15, marking the largest year over year increase of the 10 retailers the analyst monitors.
The analyst reiterates his Overweight rating for AMZN with a price target of $800.00.
Brian Nowak is a top rated analyst on TipRanks with a success rate of 61% and an average return of 7.6%. The analyst has an average return of 26% from his AMZN recommendations and is ranked #407 out of 4,038 analysts.
According to TipRanks, the consensus price target for AMZN is $821.28, marking an 8.95% upside from current prices. Currently, 91% of analyst issue a Buy rating for AMZN, while the remaining 9% issue a Hold rating for the stock.
Wal-Mart Stores, Inc.
Following a recent rally in WMT’s share price, Morgan Stanley analyst, Simeon Gutman, weighed in with where he believes the stock is headed.
The analyst believes that Wal-Mart’s recent rally is “due for a pause,” justified by its multiple now being in-line with the market. The analyst affirms that the momentum the stock has seen in the past two months is set to plateau for a little while as WMT’s shares are up 20% year-to-date and have outperformed the market by an impressive 13%.
The analyst attributes Wal-Mart’s outstanding performance to the company’s ability to meet numbers amid low expectations. The analyst also sees WMT as a safe bet while market uncertainty and macro volatility loom.
The analyst concedes that, while WMT’s relative EPS multiple is in-line with the market, the company offers much weaker growth predictions in both 2016e and 2017e, noting a -7.5% EPS decline, and a +3.5% EPS increase, respectively.
The analyst reiterates his Hold rating for WMT with a price target of $67.00, marking a 9.53% downside from current prices.
Gutman is ranked #1,830 out of 4,038 analysts on TipRanks. His success rate is 60% with an average return of 1.1%. The analyst sees an average return of 15.4% on his calls for the stock.
According to TipRanks, 20% of analysts issue a Buy rating for WMT, while 67% maintain a Hold rating, and 13% uphold a Sell rating for the stock. The consensus price target for WMT is $69.93, marking a 5.58% downside from current share prices.