Analysts Adjust Walmart Estimates: Mixed Responses To Q3 Results with Focus On Sales Growth & Expense Concerns

Several analysts revised the price target and estimates of Walmart Inc WMT following Q3 FY24 results.

Results & Outlook: Walmart reported sales growth of 5.2% Y/Y to $160.8 billion, beating the consensus of $159.55 billion, and adjusted EPS was $1.53, above $1.50 last year quarter, beating the consensus of $1.52.

Walmart now sees adjusted EPS of $6.40-$6.48 (prior $6.36-$6.46) versus an estimate of $6.48. The company raised its FY24 net sales growth (cc) outlook to 5.0%-5.5% from 4%-4.5% earlier.

DA Davidson analyst Michael Baker maintained a Buy rating with a price target of $182.

The analyst sees expense overrun and softness at the end of October as concerns, and the implied 4Q EPS guide is below consensus.

Baker revised estimates for revenue and EPS to $645.5 billion (from $642.5 billion, vs. $639.4 billion street view) and $6.44 (from $6.47, vs. street view: $6.48) for current year and $672.0 billion (from $666.3 billion, vs. cons: $663.0 billion) and $7.04 (from $7.02 vs. cons: $7.13) for next year. 

BMO Capital Markets analyst Kelly Bania reaffirmed the Outperform rating but lowered the target price to $175 from $180.

The analyst notes continued strong traffic, e-commerce, and advertising growth as bright spots but sees greater-than-expected expenses as headwinds. 

Bania cut adj. EPS estimates to $6.42 (from $6.50) for FY24 and $7.00 (from $7.20) for FY25, while expecting merchandise SSS growth of 5.1% (vs. 4.8% prior) for FY24 and 1.8% (vs. 3.5% earlier) for FY25.

RBC Capital Markets analyst Steven Shemesh maintained an Outperform rating and a price target of $168.

For FY24 and FY25, the analyst revised total company cc net sales estimates to +5.1% (from +4.1%) and +2.6% (from +3.4%), respectively, and EPS estimates to $6.51 (from $6.46) and $7.02 (from $6.97), respectively.

Stifel analyst Mark S. Astrachan trimmed the price target to $169.00 from $171.00 with a reiterated Hold rating.

The analyst says the Grocery business is likely to remain a modest tailwind, though lessening inflation that could become deflationary as significant pricing is lapped is a watch-point and could weigh on comp growth in FY25.

Astrachan lifted FY24-FY26 EPS estimates slightly following mixed Q3 results and sees revenue and EPS of $646.69 billion and $6.52 in FY24 and $672.91 billion and $7.09 for FY25, respectively.

B Of A Securities analyst Robert F. Ohmes reiterated the Buy rating & $190 price target.

The analyst expects grocery share gains & trade-downs to continue supporting the company's store & online transactions as consumers continue to manage grocery inflation, the reduction in SNAP benefits & the return of student loan repayments. 

Ohmes raised revenue estimates to $644.8 billion (from $641.0 billion) for FY24, $665.1 billion (from $661.0 billion) for FY25, and $689.3 billion (from $682.6 billion) for FY26.

Goldman Sachs analyst Kate McShane reaffirmed a Buy rating and price target of $180.

The analyst says WMT is well positioned to gain share to offset any pricing headwinds thanks to its 3P sellers growth and fulfillment capacity across e-commerce, assortment expansion, and the lift related to remodels. 

McShane expects a ramp in contribution from alternative profit streams throughout the next year and in the longer term, supporting the improving profitability profile. 

The analyst estimates revenue and EPS of $644.7 billion (vs. $639.3 billion prior) and $6.50 (vs. $6.48 earlier) in FY24, $664.1 billion (vs. $661.95 billion ) and $6.80 ($6.97 prior) for FY25.

Also Read: Walmart Joins Target In Sending Out Not-So-Merry-And-Bright Holiday Vibes

Price Action: WMT shares are trading higher by 0.11% at $156.21 on the last check Friday.

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