On Tuesday, Piper Sandler, a financial services firm, adjusted its earnings estimates for major retailers in the hardlines and broadlines sector, citing a more favorable sales environment and continued market share gains. The firm increased its forecasts for Home Depot (NYSE:HD), Lowe’s (NYSE:LOW), and Walmart (NYSE:WMT), while maintaining its estimates for Target (NYSE:TGT) and Best Buy (NYSE:BBY). The revision comes ahead of the companies’ earnings releases over the next two weeks. For Walmart specifically, InvestingPro data shows 13 analysts have revised their earnings upward for the upcoming period, with the retail giant set to report on February 20. With a substantial market capitalization of $835.79B and trailing twelve-month revenue of $673.82B, Walmart continues to dominate the retail landscape.
Analysts at Piper Sandler noted that the sales of big-ticket home durables might outperform expectations in the first half of 2025, as consumers are likely to purchase these items in anticipation of price hikes. This prediction is supported by consumer sentiment data from the University of Michigan, which also points to a more robust housing market potentially leading to accelerated comparable growth for Home Depot and Lowe’s as the year progresses.
The firm also highlighted a potential increase in sales for retailers with significant exposure to big-ticket items, as consumers may advance their purchasing decisions to avoid expected price increases due to tariffs. Appliances, which are a substantial part of sales at Lowe’s (14%) and Home Depot (9%), along with the majority of categories at Best Buy, could be affected by these tariffs.
The preliminary consumer sentiment for February showed a slight dip to 92 from January’s 104, but the December and January figures were among the highest since mid-2021 for big-ticket durable goods. Additionally, 19% of respondents in February believed it was a good time to buy these products, anticipating that prices will rise further, a sentiment reaching a 35-year peak recently, likely influenced by tariff concerns.
The backdrop for consumer spending has shifted to a neutral/positive stance, according to Piper Sandler. This change is attributed to an average 6% increase in housing turnover from October to December and a balance between goods and services spending that aligns with historical trends, as indicated by the Personal Consumption Expenditures (PCE) data. This evolving economic landscape is set to potentially benefit the sales performance of large retailers as they head into the new year. InvestingPro analysis indicates Walmart is currently trading near its 52-week high, with impressive returns of 85.4% over the past year. While the stock appears overvalued based on InvestingPro’s Fair Value model, subscribers can access over 20 additional ProTips and a comprehensive Pro Research Report for deeper insights into Walmart’s market position and growth prospects.
In other recent news, Walmart has seen significant attention from various analyst firms. Piper Sandler raised Walmart’s stock price target to $118, citing expected benefits from a positive sales environment and market share gains. The firm also revised its fourth-quarter comparable sales estimate for Walmart’s U.S. operations, increasing it from 2.5% to 4.5%.
Raymond (NSE:RYMD) James analyst Bobby Griffin increased the price target for Walmart shares to $115, up from the previous target of $95. Griffin noted strong comparable sales momentum and growth in higher-margin businesses as significant factors contributing to the company’s positive outlook.
Barclays (LON:BARC) raised Walmart’s stock price target to $108, highlighting Walmart’s ongoing market share expansion and the potential benefits from the company’s increasing digital sales. UBS analyst Michael Lasser maintained a Buy rating on Walmart stock with a steadfast $113.00 price target, projecting that Walmart’s earnings per share (EPS) for the fiscal year 2024 will likely exceed expectations.
Lastly, Telsey Advisory Group analyst Joseph Feldman increased the price target for Walmart Inc. to $115, up from the previous target of $105. Feldman noted that Walmart is anticipated to maintain robust business momentum and achieve profitable market share gains in the fourth quarter of 2024 and into 2025. These recent developments reflect a positive outlook for Walmart’s performance in the coming year.
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