Demand for Walmart’s advertising platform remains strong

BMO Capital Markets analysts told investors in a note Monday that Walmart’s (NYSE:) analyst update meeting in Bentonville, AR resulted in the firm maintaining its bullish stance on the company’s positioning from both a micro and macro standpoint.

Analysts also reiterated Outperform-rated Walmart as the firm’s top defensive pick, with a $170 price target.

One of the firm’s key takeaways from the meeting was margin inflection, with Walmart remaining confident in its plans to reach a margin inflection point next year.

“Walmart has spent several years investing in price, wages, e-commerce, and technology. The investments going forward should be more focused on capital expenditures (less PnL) to support the supply chain transformation. Additionally, WMT has room/flexibility in longer-term plans to invest in price if needed,” wrote analysts.

They also noted that demand on Walmart’s advertising platform “remains strong on several fronts, including: 1) given Walmart’s strong growth in private label as brands want to defend their market share; 2) Walmart flipped its auction to a second price auction from a first price auction, essentially resetting auctions at a lower price; and 3) Walmart is growing its 3P assortment (now ~400MM SKUs) which is bringing quite a bit of demand to Walmart’s ad platform.”

BMO also pointed to Walmart’s e-commerce growth, international business, and apparel as other positive factors for the company.