1 Analyst Gets Bullish on Walmart's E-Commerce Efforts

Walmart (NYSE: WMT) has been impressing investors recently, with shares up about 15% since June 1. While much of the enthusiasm toward the stock is tied to a strong second quarter, another notable narrative at the company is its progress in e-commere, including strong double-digit growth in e-commerce sales and Walmart's investment in a leading e-commerce marketplace in India.

E-commerce still only represents a sliver of the company's overall business. But that's not stopping BMO Capital Markets from betting on the nascent initiatives.

Walmart stock: Headed to $110?

BMO Capital Markets initiated coverage of Walmart on Monday, giving the stock a $110 price target and an outperform rating. The $110 12-month price target represents about 15% upside from where shares are trading now.

"Walmart is uniquely positioned among U.S. retailers for potential long-term e-commerce profitability," BMO said, according to CNBC. In addition, Walmart is leveraging its investments in e-commerce, tech, and its supply chain, BMO said.

Important progress

In Walmart's second quarter, the company impressed investors with strong U.S. comparable-store sales growth of 4.5%, and a 40% year-over-year jump in e-commerce sales. These metrics were a significant acceleration from Walmart's 2.1% growth in U.S. comps in Q1 and its 33% growth in e-commerce sales during the quarter.

In the company's second-quarter earnings release, CEO Doug McMillon credited the solid quarter to customers' positive response "to the way we're leveraging stores and eCommerce to make shopping faster and more convenient."

McMillon added: "We're continuing to aggressively roll out grocery pickup and delivery in the U.S., and we recently announced expanded omnichannel initiatives in China and Mexico. Customers have choices, and we're making it easier than ever for them to choose Walmart."

In May, Walmart demonstrated its aggressive commitment to long-term e-commerce initiatives when it announced it would invest in Indian e-commerce company Flipkart. The $16 billion investment would give Walmart a 77% stake in the company.

"India is one of the most attractive retail markets in the world, given its size and growth rate," McMillon said in a May 9 press release, "and our investment is an opportunity to partner with the company that is leading transformation of eCommerce in the market."

Walmart closed its investment in Flipkart in August. Further highlighting Walmart's eagerness to fuel Flipkart's expansion and innovation, the investment included $2 billion of equity funding to help accelerate its growth initiatives.

Walmart is still a brick-and-mortar company. But its e-commerce efforts can no longer be ignored.

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