© Reuters.Oversupply likely on Walmart guidance, Home Depot leaves room for undersupply – Morgan Stanley
Sam Bugeda
Morgan Stanley analysts lowered their price target on the company. home depot (NYSE:) rose from $360 to $340, and Walmart (NYSE:) rose from $161 to $160.
Analysts commented on the earnings of both companies and found some similarities between the two – wage investment and inventory progress – more contrasts such as guidance conservatism, consumer tone and traffic/tickets. had.
The stock price reaction “looks fair,” analysts said, with Walmart rising slightly and Home Depot tumbling after launch.
“At first glance, WMT’s comments about signs of heightened consumer stress appear to contradict HD’s assumptions about relatively resilient consumers in 2023. We believe this can be partially explained by HD’s different core customers,” said the analyst. “WMT are low- to middle-income consumers grappling with high inflation, whereas HD are homeowners who are benefiting from inflation in the form of their home equity.”
“WMT’s more sober consumer outlook will undoubtedly be informed by the weakness seen in general merchandise and an overall mix shift towards consumables,” they added. A more balanced view of the may underestimate the lagging impact of a rapid slowdown in housing indicators.”
They go on to say that WMT is likely to over-provision its guidance, while HD guidance “leaves room for under-provision.”