Walmart Posts Q3 Sales Beat, Raises Guidance: Analysts Expect Strong Earnings Growth Ahead

Here are some key takeaways from analyst coverage of Walmart Inc WMT after the retailer reported upbeat third-quarter sales.

• Goldman Sachs analyst Kate McShane maintained a Buy rating, while raising the price target from $81 to $93.
• Truist Securities analyst Scot Ciccarelli reiterated a Buy rating, while lifting the price target from $89 to $98.
• Telsey Advisory Group analyst Joseph Feldman reaffirmed an Outperform rating, while raising the price target from $92 to $100.
• Bank of America Securities analyst Robert Ohmes maintained a Buy rating, while raising the price target from $95 to $105.
• KeyBanc Securities analyst Bradley Thomas reiterated an Overweight rating, while lifting the price target from $88 to $96.
• JPMorgan analyst Christopher Horvers reaffirmed an Overweight rating and price target of $97.
• BMO Capital Markets analyst Kelly Bania maintained an Outperform rating and price target of $100.
• DA Davidson analyst Michael Baker reiterated Buy rating and price target of $85.

Check out other analyst stock ratings.

Goldman Sachs: Walmart's US same-store sales grew by 5.3%, tracking better than consensus of 3.9%. This was driven by traffic, up 3.1%, and average ticket size, up 2.1%.

"WMT saw broad-based strength in the quarter, noting market share gains in the US, both in grocery and general merchandise, with households earning more than $100K accounting for 75% of share gains," McShane said in a note. The company seems well positioned to continue generating strong earnings growth for the rest of the year, supported by market share gains and improving profitability profile.

Truist Securities: Walmart is gaining market share "across customer cohorts." Around 75% of the company’s third-quarter gains came from higher-income households.

"Walmart's focus on price, convenience and assortment continues to resonate strongly with inflation-fatigued consumers," , Ciccarelli said.

After three years of declines, the company's higher-margin General Merchandise category grew slightly in the second quarter and growth accelerated to low single digits in the third quarter, the analyst stated. Walmart's higher-margin revenue streams enable the company to reinvest and expand margins, Ciccarelli added.

Telsey Advisory Group: Walmart company reported earnings of 58 cents per share, beating consensus of 53 cents per share, with sales growth of 5.5% to $169.6 billion, higher than market expectations of $167.7 billion, he added.

Telsey’s Feldman was “impressed” by “the comp of 5.3% vs. our estimate of 3.5%." Walmart gained market share in the U.S., "an increase in private brand penetration," and retuned to growth in general merchandise.

BofA Securities: Walmart raised guidance for adjusted earnings of $2.42-$2.47 per share, net sales of +4.8%-5.1% in constant currency terms and adjusted EBIT growth of +8.5%-9.25%, Ohmes said. In the fourth quarter, the company is likely to generate earnings of 62 cents per share, 4.2% net sales growth and US comps of +3.5%, he added.

"WMT continues to gain share across product categories and income cohorts as its strong value and digital conveni resonate," the analyst wrote. This year is a shortened holiday season, with five fewer days that last year between Thanksgiving and Christmas, which could "lead to higher online spend, favoring large digital/omni-channel players like WMT.”

KeyBanc Capital Markets: Walmart's third-quarter results were mostly above expectations, "driven by broad market share gains," Thomas said. U.S. comps accelerated sequentially with traffic remaining strong, he added.

"Encouragingly, WMT U.S. general merchandise comps inflected positive (+LSD), the first positive quarter since 2021, with unit volume +MSD," the analyst wrote. Walmart continues to be among "the most compelling investment opportunities in retail," he further stated.

JPMorgan: Walmart has the ability to "drive margins higher over time as its alternative profit pools gain momentum,” Horvers said.

Walmart US was able to grow operating income by 9.1% year-on-year, despite a growth headwind of 120 to 150 basis points mainly in the SG&A line, the analyst stated. "Structurally, we continue to see a path to 6.5% WMT US segment margins over time and for International to eclipse 6% as alternate profit pools scale," he further wrote.

BMO Capital Markets: Walmart witnessed "strong demand for expedited orders with incremental convenience fees and supply chain automation are helping to drive continued declines in net delivery costs per order (down 40% for third consecutive quarter)," Bania said.

The company's US third-party marketplace grew by 42% in the third quarter, and has the capacity to continue to grow, the analyst stated. Membership fees and advertising accounted for a third of Walmart's EBIT and Global advertising seems to be on track to reach around $4.3 billion in fiscal 2025.

DA Davidson: Walmart's consolidated revenues came in at $169,588 million, higher than consensus of $167,922 million, Baker said. US comps, excluding fuel, grew by 5.3% year-on-year and by 4.2% sequentially, he added.

Traffic "remains positive," up 3.1%, although this marked a slowdown from the 3.6% growth in the previous quarter, the analyst stated. "But, the average ticket was up 2.1%, much better than the up 0.6% last quarter," he further wrote.

Price Action: Shares of Walmart had risen by 0.37% to $86.92 at the time of publication on Wednesday.

Read More:

• Walmart Market Share Surges As Six-Figure Income Households Drive 75% Of Growth In Q3: ‘People Come To Us To Shop As A Primary Destination’

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