On Tuesday, Piper Sandler adjusted its outlook on Walmart Inc. (NYSE:WMT), elevating the stock’s price target to $118 from the previous $93, while maintaining an Overweight rating. The firm’s analysts highlighted the positive sales environment and market share gains that are expected to benefit Walmart, along with other big box retailers, in the upcoming earnings reports over the next two weeks. This optimistic outlook aligns with broader analyst sentiment, as InvestingPro data shows 13 analysts have recently revised their earnings estimates upward for the upcoming period.
Walmart shares have seen a notable increase, up by 15% year-to-date, outperforming the S&P 500’s 4% rise. This uptick is attributed to Walmart’s strong growth metrics, which are garnering attention from both Growth and Consumer Staples investors looking for large cap outperformance in the Consumer sector.
The firm has also revised its fourth-quarter comparable sales estimate for Walmart’s U.S. operations, increasing it from 2.5% to 4.5%. This adjustment comes despite an expected deceleration in comparison to the third quarter on a two- and three-year stacked basis, even with favorable holiday spending figures.
Walmart’s EBIT growth has consistently met or exceeded the company’s target range of 4%-8% in recent quarters. This is particularly impressive given the minimal contribution from discretionary spending in the General Merchandise category, which has lagged behind the company’s overall growth but has shown signs of improvement in the last two quarters.
Looking ahead, the analysts anticipate that Walmart’s EBIT growth could accelerate further into 2025 if current trends persist, especially with high-profit revenue streams like Supplier Advertising and Marketplace gaining momentum. The improvement in General Merchandise is not only beneficial for the company’s product mix but could also catalyze a flywheel effect within Walmart’s marketplace ecosystem, attracting more discretionary suppliers and boosting supplier advertising. With an EBITDA of $41.76 billion and a strong analyst consensus recommendation of 1.55, InvestingPro subscribers can access over 20 additional key insights and metrics to better evaluate Walmart’s growth trajectory.
In other recent news, Walmart has seen a series of positive adjustments from various financial analysts. Raymond (NSE:RYMD) James raised the stock price target to $115, citing strong sales momentum and a 28% year-over-year increase in advertising revenue. Analyst Bobby Griffin highlighted the potential for earnings expansion, despite the challenge of foreign exchange rates.
Meanwhile, Barclays (LON:BARC) lifted the stock price target to $108, maintaining an Overweight rating. The bank pointed out Walmart’s ongoing market share expansion and the potential benefits from increasing digital sales. The improving profitability of its digital operations is expected to contribute to healthier margins.
UBS maintained a Buy rating on Walmart stock with a steadfast $113.00 price target. Analyst Michael Lasser anticipates that Walmart’s earnings per share (EPS) for the fiscal year 2024 will likely exceed expectations, setting a solid foundation for the following year.
Telsey Advisory Group also increased the price target for Walmart to $115, noting the company’s robust business momentum and profitable market share gains. Analyst Joseph Feldman highlighted Walmart’s defensive product mix, emphasis on value and convenience, and strong execution as fundamental factors driving performance.
However, not all recent developments have been positive. Tri-Union Seafoods has voluntarily recalled certain batches of canned tuna products sold at Walmart, among other retailers, due to a potential contamination risk. This recall is a precautionary measure following a notification from the supplier about a manufacturing defect.
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