UBS Warburg lowers Wal-Mart (WMT) to neutral from buy.
Analyst Gary Balter says he's concerned the discount-retail giant won't show the upside leverage that other retailers have as the economy improves. Also, he's concerned with the lack of expense leverage given strong domestic comparison-store sales. He says it seems the company is stuck between the cautious consumer and rising costs.
Balter continues to see evidence that lower-income customers aren't enjoying the spending pickup that middle-income and higher-income customers are enjoying. He cut the price target to $60, which is a 50% premium to the market multiple on 2004 earnings per estimates, and is a fair premium for an excellent long-term story that should provide a slightly lower growth rate than the market in 2004.