UBS Warburg Cuts Wal-Mart to 'Buy'

Analyst Linda Kristiansen says her target price on the discount retail giant no longer warrants her previous strong buy rating

UBS Warburg downgraded Wal-Mart (WMT ) to buy from strong buy.

Analyst Linda Kristiansen says she doesn't see any near term negative catalysts for Wal-Mart shares. However, her $70 target, which implies 14% upside potential, is more consistent with a buy than strong buy. She notes Wal-Mart shares are up about 31% since Sept. 25, 2001, vs. an increase of about 14% for the S&P 500. She continues to forecast an improvement in the company's aggregate pre-tax return on assets to about 16% in fiscal 2003 (Jan.) from about 15% in fiscal 2002, driven by stronger international returns, accelerated domestic returns, and strong inventory mgmt. She keeps her above-consensus $1.80 fiscal 2003 EPS estimate.

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