Wal-Mart shares drop after JPMorgan downgrade

Shares of Wal-Mart Stores Inc. traded below its previous close on Monday. The main reason of such decline is that J. P. Morgan has given a neutral rating ahead of the company's fourth-quarter financial results. J. P. Morgan analyst has predicted that the net earnings of the retailing giant may decline in the fourth quarter.

The shares of Wal-Mart, a portion of the Dow Jones Industrial Average, were down 1.6% to $54.80, making them one among the weakest players for the blue-chip barometer in a mixed session.

According to J. P. Morgan, the sentiment in Wal-Mart is not so impressive, and there seems no likeliness of a positive catalyst around that might vault the stock out of its over decade-long trade range from $45 a share to $60 per share.

“Separately, year-to-date the stock has enjoyed a bit of a rotation as some other higher-beta names have struggled ahead of tougher compares/rising sourcing costs,” the analysts wrote in a note Monday. “As a result, we’re going to use this opportunity to move to the sidelines.”

The shares of Wal-Mart are up about 2% till now in 2011, even after yesterday’s pullback. J. P. Morgan has now given a target price of $54 on the stock.