Walmart is Ready to Weather the Storm Says Analyst

Walmart also said it would extend its free at-home returns beyond the holidays

Deputy Editor
Dec 21, 2020 at 10:49 AM
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Walmart Inc (NYSE:WMT) is following today's broad-market trend, though some of these losses are likely being pared by a bull note from RBC this morning. The analyst lifted its price target to $170 from $153 and upgraded the security to "outperform" from "sector perform." RBC said Walmart is well positioned to perform well in a more challenged environment, as well as a recovering post-vaccine scenario. Separately, the company just announced a free at-home return option, which it will extend beyond the holiday season in an effort to compete with Amazon (AMZN). At last check, WMT is down 0.3% at $145.43. 

The equity has been on a downward pattern since touching its all-time high of $153.66 on Dec. 1. While WMT has lost nearly 5% this month, the stock still boats a 22.3% year-to-date lead, and it appears as if the $144 level is holding out at a floor on the charts. Along with the two bull signals flashing on the charts, it also looks like Walmart stock is testing support at the 60-day moving average, which helped capture a pullback in late October. 

Coming into today, the majority of  analysts were optimistic on the stock, with 17 calling it a "buy" or better. There were still some holdouts, however. Six still call the stock a "hold" or worse. Meanwhile, the 12-month consensus price target of $162.28 is an 11.8% premium to current levels. 

Options players have been a bit more bearish than usual. Though calls still outnumber puts on an overall basis, the equity's 10-day put/call volume ratio of 0.33 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 63% of readings from the past year. This implies a healthier-than-usual appetite for long puts of late. 

A look at today's trading shows 24,000 calls and 5,375 puts across the tape so far -- 1.3 times the intraday average. The most popular position by far is the weekly 12/24 147-strike call, where it looks like contracts are being bought to open, indicating that these traders expect the underlying stock to stay below the $147 mark until these contracts expire on Christmas Eve. 

 

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