September 4, 2018 San Jose / CA / USA - Walmart's "Everyday low price" tagline posted inside one of their stores located in south San Francisco bay area
Walmart share price has made a steady recovery in the past few weeks as optimism about demand rises. WMT stock is trading at $145, which is the highest it has been since January 14th. It has risen by more than 10% from its lowest level this year. Like all American retailers, Walmart has been going through a difficult time in the past few quarters. For one, the company’s logistics challenges have accelerated because of the challenges on shipping. It has been difficult to find ships for months while the available ones have hiked their prices.
At the same time, the company is now buying its products at a higher price, as evidenced by the recent consumer price index (CPI) and producer price index (PPI) data. The two numbers revealed that the headline inflation rose to 7.9% and 8% in February, respectively. The real numbers are significantly higher than the reported ones.
Meanwhile, wages are also making a steady increase. Last week, data by the Bureau of Labor Statistics showed that wages rose by over 5% in February. Indeed, most retailers have been forced to boost their wages, with Target paying $24 per hour. Additionally, consumer spending is expected to slow down as interest rates rise and as the impact of last year’s stimulus package fade.
Still, analysts are bullish about the stock. According to MarketBeat, the average target for the stock is about $167, which is about $20 above the current level. Most of them have recently lowered their estimates. For example, those at Morgan Stanley and Raymond James have slashed their estimate from $170 to $165. The same has happened at Jefferies and Deutsche Bank.
The daily chart shows that the WMT stock price has made a strong recovery in the past few days. It is now trading at $146, which is an important resistance level since it struggled to move above it several times this month. The 25-day and 50-day moving averages have also made a bullish crossover pattern while the MACD has moved above the neutral level.
Therefore, at this point, bulls must move above the resistance at $146 for the bullish trend to be confirmed. Failure to do so will mean that the stock has formed a double-top pattern, which will lead to a sharp decline in the coming days.
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