On Wednesday, UBS analyst Michael Lasser maintained a Buy rating on Walmart (NYSE:WMT) stock with a steadfast $113.00 price target. With a market capitalization of $829 billion, Walmart commands significant attention from investors. According to InvestingPro data, analysts maintain a strong bullish consensus on the stock, with 9 analysts recently revising their earnings expectations upward. Lasser anticipates that Walmart will meet the heightened expectations for its fourth-quarter performance, despite the market’s increased scrutiny due to the retailer’s higher valuation multiple of 42.3x earnings. He projects that Walmart’s earnings per share (EPS) for the fiscal year 2024 will likely exceed expectations, landing between $2.55 and $2.60. This outperformance sets a solid foundation for the following year. With Walmart’s next earnings report scheduled for February 20, investors following InvestingPro analysis note that the company has demonstrated solid revenue growth of 5.48% over the last twelve months, suggesting strong operational execution. For deeper insights into Walmart’s valuation and growth metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The analyst highlighted that as Walmart heads into its fourth-quarter earnings report, the market will be paying close attention to various aspects of the company’s performance. This increased attention is a result of the company’s elevated valuation multiple, with InvestingPro’s Fair Value analysis indicating the stock is currently trading above its intrinsic value. Lasser suggests that Walmart’s results are expected to match the high expectations that have been set.
The focus is primarily on how Walmart will guide for the upcoming year. Current market consensus embeds a 10.4% growth in operating income based on a 4.2% increase in top-line growth, leading to a consensus EPS estimate of $2.77. These figures surpass Walmart’s long-term growth algorithm, which forecasts a 4% increase in top-line and more than 4% growth in operating income, potentially reaching up to 8% in operating income growth.
Lasser’s analysis indicates that if Walmart reports an EPS that is $0.05 to $0.10 higher than anticipated, it would imply that the company’s EPS for fiscal year 2024 would be $2.55 to $2.60. Building on this higher base and applying a 7-8% EPS growth, he estimates an EPS range of $2.73 to $2.81 for fiscal year 2025. This forecast compares favorably to the current consensus EPS estimate of $2.77, suggesting potential for Walmart to outperform market expectations in the coming year.
In other recent news, Walmart has been a focal point of numerous analyst upgrades. Telsey Advisory Group raised their stock target to $115, highlighting Walmart’s expected profitable market share gains and robust business momentum. Bernstein analysts also increased their target to $117, emphasizing Walmart’s consistent growth surpassing long-term goals. Citi analysts followed suit, increasing their price target to $120 based on anticipated fourth-quarter earnings that surpass consensus and company guidance. Finally, RBC Capital Markets increased their price target from $105 to $109, expressing confidence in Walmart’s ability to navigate economic challenges.
In addition, Walmart was implicated in a voluntary recall by Tri-Union Seafoods due to potential contamination risks. The recall affects canned tuna products sold under various brand names, including those distributed to Walmart. The recall is a precautionary measure due to a manufacturing defect that might compromise the product seal over time, potentially leading to contamination.
These developments underscore the dynamic nature of Walmart’s operations and the attention it garners from analysts. Investors should note these recent events as they consider their positions in the company.
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