For the Q3 earnings season and going into the holiday season, Cowen said that Walmart (NYSE:WMT) and Ulta Beauty (NASDAQ:ULTA) are its top picks in the retail segment.
Analyst Oliver Chen likes Walmart (WMT) over Target (TGT) as he expects that the gap in sales trends between between food/consumables and discretionary goods will continue as food inflation continues.
He rates both stocks outperform. His price target for Walmart (WMT) is $185 (~13% upside based on Tuesday’s close), while it is $161 (~48% upside) for Target (TGT).
Chen also prefers Ulta (ULTA) over Estee Lauder (EL) Ulta over stating that the latter’s earnings could be unpredictable given LVMH Moet Hennessy (OTCPK:LVMHF)(OTCPK:LVMUY) indicating a slowdown in Europe and in its its perfumes and cosmetics business.
He rates both Ulta (ULTA) and Estee Lauder at outperform with price targets of, respectively, $531 (~40% upside) and $180 (~30% upside).
“We like their lesser degree of weather exposure and data-centric loyalty program execution,” Chen said of Walmart (WMT) and Ulta (ULTA).
