Retail giant Walmart (NYSE: WMT) has inked a deal to invest in indoor vertical farming company Plenty Unlimited, Inc. as a part of a $400M Series E funding round.
Walmart becomes the first big U.S. retailer to invest in vertical farming to enhance access to high-quality, fresh produce for its customers at retail stores.
Details of the Deal
Plenty’s indoor farming technology delivers pesticide-free fresh fruits, greens, and vegetables, keeping items fresher for longer in 100% recyclable product packaging.
Using a combination of engineering, software, and sustainable crop science to grow multiple crops on a single platform, the company’s indoor farming architecture is far different from its greenhouse and other indoor farming peers.
Through the long-term strategic equity investment, Walmart and Plenty will form a new, market-leading product category in vertical farming to deliver fresh produce to Walmart customers throughout the year.
Expected to start later this year, the partnership will enable Walmart to offer leafy greens from Plenty’s Compton farm to all of its California stores.
The deal is subject to regulatory approval. Upon completion, Walmart will join Plenty’s Board of Directors.
Management Weighs In
Charles Redfield, chief merchandising officer at Walmart U.S., commented, “At Walmart, we are focused on identifying and investing in innovative food solutions to bring our customers the freshest, highest-quality foods at the best prices.”
He further added, “This partnership not only accelerates agricultural innovation, but reinforces our commitment to sustainability, by delivering a new category of fresh that is good for people and the planet.”
Analyst Recommendations
On January 21, KeyBanc analyst Edward Yruma downgraded Walmart to a Hold from a Buy due to ongoing labor cost pressures.
Despite being one of the strongest omnichannel U.S. retailers, Yruma stated that “the lack of stimulus tailwinds and continued inflationary pressure may disproportionately impact Walmart’s ‘middle of the middle’ U.S. consumer near term.”
He also noted, “Walmart is also the largest private U.S. employer (2.3 million-plus employees), and we think wage pressure will continue to intensify.”
Overall, Walmart has a Moderate Buy consensus rating based on 13 Buys and 5 Holds. The average Walmart price projection of $170.94 implies 24.6% upside potential to current levels.
The company’s upcoming earnings for the fourth quarter of Fiscal 2021 are scheduled to be released on February 17, 2022.
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