Evercore ISI analysts added Walmart (NYSE:WMT) and Target (TGT) to its Positive TAP list on Monday, initiating both with Outperform ratings.
The firm said that Walmart's 1Q Comp of 3.6% and EPS of $0.53 are attainable, with potential upside in their 5/16 earnings report.
"We believe the company is executing at a high level while pursuing initiatives such as digital advertising, Walmart Plus, and automation: Even a modest improvement in digital profitability (before considering incremental advertising/alternative profit opportunity) provides a considerable margin capture opportunity," wrote the firm.
"Our sense is that the company will speak to a fairly steady low to middle-income consumer, in addition to higher income share capture, with positive traffic and share gain reasons for the commentary to skew constructive through the year."
Evercore sees a near-term upside to the mid-to-high $60 per share level and an upward bias to consensus expectations.
Target is seen as having a potential upside to $170 and above, pending a solid guide/constructive tone in its May 20 earnings release.
"Target appears poised for a positive traffic/share catch up starting in mid March," said Evercore. "Target appears to have cushion on the EBIT margin front given cost control/freight benefits in 1H24."
Analysts believe investors are likely to want to own the stock for its likely upturn in traffic/comps against easy compares into this summer.
"The 'easy comps' caused by cycling last year's pride assortment snafu, coupled with improvement in our RSLI for the industry into 2H24 provide a reason for Target to share a constructive comp outlook of around 2-3% heading into 2Q in our view," added Evercore. However, they state that while they expect noteworthy improvement in trend/positive growth inflection, "there is still much work to do in order to regain the market share and customers lost last year amidst a still volatile consumer backdrop."