UPDATE 1-Citigroup cuts Wal-Mart to hold on card check concerns
March 10 (Reuters) - Citigroup downgraded Wal-Mart Stores Inc (WMT.N) to "hold" from "buy" saying the proposed card check legislation would increase laborcosts and could be a significant drag to earnings for the world's largest retailer.
"We believe that WMT would be the primary target if EFCA/card check were to be passed," analyst Deborah Weinswig wrote in a note to clients.
If theunions are successful, the company would have to concede higher wages formore seasoned employees, increase employee benefits significantly, and would experience diminished workforce flexibility, the analyst said.
She cut her price target on the stock to $48 from $53.
The legislation will be introduced on Tuesday in the U.S. Congress and if passed, it will make it easier for workers to unionize.
Known as "card check" or Employee Free Choice Act (EFCA), the legislation would let employees form a union if a majority of them in a workplace sign authorization cards. [nN09482486]
Wal-Mart shares closed at $47.51 Monday on the New York Stock Exchange. (Reporting by Neha Singh in Bangalore; Editing by Gopakumar Warrier)