Walmart Inc WMT analysts are highlighting the company’s market share gains and improving gross margins in the retailer’s second-quarter earnings report.
The Walmart Analysts:
- Bank of America analyst Robert Ohmes reiterated a Buy rating and raised the price target from $75 to $85.
- KeyBanc analyst Bradley Thomas reiterated an Overweight rating and $82 price target.
- BMO Capital analyst Kelly Bania reiterated an Outperform rating and $80 price target.
- Truist analyst Scot Ciccarelli maintained a Hold rating and raised the price target from $64 to $76.
- Goldman Sachs analyst Kate McShane reiterated a Buy rating and raised the price target from $73 to $81.
- RBC Capital analyst Steven Shemesh reiterated an Outperform rating and raised the price target from $74 to $80.
- Piper Sandler analyst Peter Keith reiterated an Overweight rating and raised the price target from $81 to $83.
Bank of America on Walmart: Strong revenue and gross margin momentum should continue for the retailer, Ohmes said in a new investor note.
The analyst said comparable sales upside is coming from market share gains across different income levels, including higher income earners. Ohmes also sees higher gross margin expansion coming from the increased contribution from items like digital advertising, third-party marketplace and fulfillment services.
"Reiterate Buy on continued share gains across incomes and product categories, strong omni-channel execution & improving long-term profitability," Ohmes said.
KeyBanc on Walmart: The retailer's flywheel is accelerating, Thomas said.
"WMT reported strong 2Q results driven by broad market share gains and initiatives, which position WMT as one of the most compelling investment opportunities in retail," Thomas said.
The analyst said consumer trends were consistent in the second quarter, and management commentary pointed to the trends continuing in August. Walmart's raised guidance comes with the company expecting sales, operating income and earnings per share all above previous announced ranges.
Thomas said Walmart is gaining market share in grocery, which is encouraging.
"Looking ahead, we remain positive on WMT's compelling consumer value proposition, its multi-faceted growth initiatives, and the automation of its supply chain."
BMO on Walmart: E-commerce momentum and improved profitability stood out in the earnings report for Bania.
The analyst noted that the company’s consistent top-line revenue is particularly impressive given the challenging consumer environment, where many retailers have struggled to maintain similar stability.
"We believe current trends and momentum, including inflecting general merchandise and continued improvement in e-commerce profitability, point to durability and consistency of earnings performance despite management's prudent choice to guide conservatively," Bania said.
The second-quarter results prove that Walmart is in a strong position to continue market share gains, the analyst added.
"We believe investors will continue to give WMT credit for the moat being created by its significant omni-channel investments and higher-margin initiatives."
Bania said Walmart's valuation "can continue to move higher."
Truist on Walmart: Improving margins and e-commerce business scaling were key highlights in the earnings report for Ciccarelli.
"We think that Walmart's continued shared gains have likely masked any broader consumer slowdown," Ciccarelli said.
The analyst said price, convenience and assortment have helped Walmart improve its market share.
"No evidence of incremental consumer weakness – Walmart's investments over the past decade have allowed it to move beyond a low-price model to a ‘price + convenience + assortment' offering."
The analyst said consumers are willing to spend on value and trade up for newness and innovation, all items that could benefit Walmart.
Goldman Sachs on Walmart: Improved results for general merchandise at Walmart was a highlight in the earnings report for McShane.
"We believe WMT is well positioned to continue driving solid earnings growth for the remainder of the year, supported by market share gains given its compelling proposition for value and convenience," McShane said.
The analyst said Walmart's value offering is resonating with customers across all income levels, with higher income households leading the gains.
RBC Capital on Walmart: The retailer offers a unique way for investors to play defense, Shemesh said.
"WMT posted impressive top-line growth, which appears to be a function of market share gains, not U.S. consumer stability," Shemesh said.
The analyst said Walmart's advertising business could grow faster, but management is focused on the customer experience currently.
Piper Sandler on Walmart: Advertising and membership revenue were two highlights in the second quarter for Keith.
The analyst highlighted that these segments could drive future EBIT growth. Additionally, Walmart Plus saw double-digit membership growth in the quarter, and Sam's Club membership reached record levels, according to the analyst.
"WMT impressively saw sales upside across all business segments, with notable contribution from E-comm driven by delivery momentum," Keith said.
WMT Price Action: Walmart shares trade at $73.30 versus a 52-week trading range off $49.85 to $74.44. Walmart stock is up 40% year-to-date in 2024.
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