By Michael Elkins
Morgan Stanley reiterated an Overweight rating and $161.00 price target on Walmart (NYSE:WMT), following Morgan Stanley's latest AlphaWise Consumer Pulse Survey conducted on January 20-23.
According to the survey, Walmart+ has 18.1m members, or 14.0% US household penetration. This is slightly below the last published estimate in October when Walmart+ had 18.6m members, though within the margin of error.
The MS analysts believe that momentum may be stalling a bit but gains from ~2m inflection in October are holding.
The analysts met with Walmart CFO John David Rainey in December and came away from the meeting with the impression that the Walmart+ strategy may be evolving. For the initial 1-2 years after launching, the focus was less on maximizing membership and more on optimizing the experience for current members and adding new features to the program. Now, the focus may be shifting to maximizing membership growth, which may be in preparation for more disclosures on Walmart+.
Over the past 1-2 weeks, WMT has been running a new referral-based promotion. These are the first promotions observed that appear explicitly aimed at increasing the Walmart+ membership base. While these efforts don’t seem to be driving further membership growth yet, they point to an evolving strategy that may result in faster membership growth down the road.
Shares of WMT are down 0.26% in pre-market trading on Wednesday.