Alexander Farnsworth
The Walmart stock (NYSE:WMT) should work in a better macro backdrop since it has a great discretionary exposure and emerging accelerating earnings algorithm, which should drive EPS up, according to Goldman Sachs’ Americas Retail report for 2024.
Goldman analysts recommend the stock for investing in next year.
Consumer spending trends look positive in 2024, according to recent data, but GS analysts wrote that investors are “still heavily debating how strong the consumer can look next year, which we think will drive good appetite for both defensive and discretionary names.”
According to the report, deflation will be “both a headwind and tailwind” for stocks like Walmart (WMT).
It will be a headwind because prices are expected to come down not only on food but in general merchandise, but it will also be a tailwind because, with deflation, “we would expect unit growth to improve, especially in discretionary categories,” analysts wrote.
Retailers such as Walmart (WMT) and Target (TGT) can offset pricing pressures with market share gains and an improvement in discretionary sales, analysts said.