By Sam Boughedda
Barclays initiated coverage of Walmart (NYSE:WMT), AutoZone (NYSE:AZO), Tractor Supply (NASDAQ:TSCO), Five Below (NASDAQ:FIVE), Driven Brands (NASDAQ:DRVN), and Arhaus (NASDAQ:ARHS) at Overweight in a note on Wednesday.
Barclays analysts also initiated coverage of various other U.S. Broadlines, Hardlines & Food Retail stocks, with Home Depot (NYSE:HD), Lowe's Companies (NYSE:LOW), Target (NYSE:TGT), Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR), O'Reilly Automotive (NASDAQ:ORLY), Costco (NASDAQ:COST), BJ's Wholesale Club (NYSE:BJ), RH (NYSE:RH), Williams-Sonoma (NYSE:WSM), Wayfair (NYSE:W), Overstock.com (NASDAQ:OSTK), and BlackBerry (NYSE:BB) started at Equal-Weight, while Floor & Decor Holdings (NYSE:FND) and Advance Auto Parts (NYSE:AAP) were assigned Underweight ratings.
"We take a selective stance as we balance a positive structural view of this group post-pandemic and a relatively stable consumer backdrop (supported by employment) with pockets of cyclical risk (categories that were pulled forward and/or are exposed to elevated interest rates), and strong YTD stock moves that embed a little EPS risk," said the analysts.
"Overall, we see the supply/demand dynamics that have supported record margins normalizing, and the balance of the power within the retail ecosystem shifting back to the consumer."
Barclays prefers names that have defensive characteristics, plus other drivers, or can grow through the cycle through market share or P&L offsets, the analysts said.
The analysts state that Walmart tops the list of companies with defensive characteristics.