Goldman Adds Walmart Stock to Belief Buy List and Dumps Target

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Goldman Sachs swaps one big box dealer for another.

The company added Walmart to its conviction buy list on Tuesday, indicating improved profitability and an increased share of the U.S. grocery market.

At the same time, analysts removed Target from this list. The company remains bullish on the stock, but expects the company to grow more slowly, in line with its historic norms, over the next year.

According to Gina Sanchez, CEO of Chantico Global and Chief Market Strategist at Lido Advisors, Goldman made the right decision.

“Lido Advisors made a similar trade,” Sanchez told CNBC’s Trading Nation on Tuesday. “We owned Target, now we own Walmart, and one of the reasons is actually similar to the Goldman Sachs statement.”

Like Goldman, Sanchez says that Walmart’s investments in e-commerce and its strength in the grocery space are two reasons why Walmart is optimistic. That one-two punch – an increased e-commerce presence and the need for brick and mortar locations for grocery shopping – is “important to the future of Walmart,” she said.

Todd Gordon, founder of Inside Edge Capital Management, is more cautious, at least until Walmart’s technical line-up improves. Walmart has lagged behind Target and the broader market in 2021.

“Since August last year – when the two broke up; they chased one another – the target increased by 64% [and] Walmart is only up 9% compared to the S&P benchmark of 30%. So it’s a pretty tough decision, “Gordon said in the same interview.

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The fundamental picture looks solid for Walmart, Gordon adds, with investments in e-commerce that may bear fruit. He says it might make sense for investors to take a partial position on fundamental strength and increase it as the technicals get stronger.

“If we cross the $ 155 mark, you could see a breakout of trend line resistance, which happened in early 2019,” Gordon said.

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The stock would have to add 7% to reach that level. Walmart closed on Tuesday for just under $ 145.

Disclosure: Lido Advisors owns shares of Walmart.

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