HSBC tags Wal-Mart Stores with ‘Outperform’ rating

NEW YORK — Wal-Mart Stores Inc.’s expansion in fast-growing emerging markets will fuel earnings and revenue growth, an analyst said on Monday, while giving shares of the world’s largest retailer an “Outperform” rating.

HSBC analyst Francisco Chevez said Wal-Mart will continue expanding in emerging markets, such as Brazil, India, China and Russia, eventually, by 2011. Chevez expects that international growth will outpace the U.S. for the future.

He offered Walmex, Wal-Mart’s Mexican operations, as an example of the kind of international growth Wal-Mart can record. Walmex benefited from the expansion of credit in Mexico that helped consumers buy big-ticket purchases, for instance. Walmex accounts for nearly 5 percent of Wal-Mart’s total revenue, he added.

“Wal-Mart is well-positioned to create value in many developing markets the way it has done in Mexico,” Chevez wrote in a client note, calling Walmex one of the most “efficient and profitable” retailers worldwide.

However, Chevez said Wal-Mart’s growth opportunities are limited in the U.S. — a mature market — although there are still opportunities to improve operations in its home market.

The U.S. division has also been helped by curtailed store expansion efforts and better management of inventory.

Shares of Wal-Mart rose 61 cents to $50.72.