Walmart Is Winning Across Income Levels - Analysts Say This Growth Will Continue

Stephens & Co analyst Ben Bienvenu maintained Walmart Inc WMT with an Overweight and raised the price target from $185 to $190.

As Walmart continues to advance in the omnichannel experience for customers and sustains its everyday low-price positioning, it will be difficult for competitors to regain the market share that WMT has taken over the last several years. 

Also Read: Amazon Fresh Expands Delivery to Non-Prime Members, Ramps Up Competition with Walmart

Additionally, the analyst expects margins to improve as top-line momentum continues and the company anniversaries significant investments made in the previous year. 

With the company's commitment to improving returns and the investments in technology and alternative higher-margin revenue streams to support these goals, there is merit for higher conviction in improving margins going into next year. 

The analyst raised his estimates for 3Q24 and FY24, expecting another beat and raise for the company.

The analyst's 3Q adjusted EPS estimate increases to $1.58 (from $1.48 prior), FY24 adjusted EPS estimate raises to $6.55 (from $6.41 prior), and FY25 EPS estimate to $7.19 (from $7.03 prior).

Stifel analyst Mark Astrachan maintained Walmart with a Hold and raised the price target from $169 to $171.

Astrachan's analysis shows Walmart continues to have the highest shopping intentions relative to peers, overall and, significantly, across income levels. 

This includes retaining the highest earners who began shopping at Walmart in early 2022 as inflation accelerated. 

Specifically, 70% of respondents shopping at Walmart since early February earn more than $100,000/year, compared to 80% of those earning less than $100,000/year. 

This is the narrowest spread amongst larger, broadline retailers and contrasts with Costco and Target, whose shoppers skew to higher income-earning households. 

The analyst notes that Walmart's everyday low-price model is resonating with households across income levels and, importantly, retaining share gains amongst the highest earners driven by heightened inflation beginning in early 2022.

Astrachan expects 3Q EPS of $1.54, FY24 EPS of $6.54 and FY25 EPS of $7.02.

Price Action: WMT shares traded higher by 0.85% at $167.61 on the last check Monday.