2 Walmart Analysts On The Q1 Print: What They're Saying As Investors Pull Back

Walmart Inc WMT shares tanked on Tuesday after the company’s quarterly earnings missed Street expectations by a wide margin, mainly due to rising fuel costs and higher inventory levels.

Raymond James On Walmart: Analyst Olivia Tong reiterated an Outperform rating on Walmart. 

Management cited various factors for the earnings shortfall, including elevated operating costs, higher inventory, decelerating demand for certain home items, “exacerbated by lapping stimulus in the year-ago period” and “trade down to private label in certain categories, notably Food,” analyst Tong wrote in the note.

Morgan Stanley On Walmart: Analyst Simeon Gutman maintained an Outperform rating, while reducing the price target from $167 to $156.

The analyst said there are three possible reasons for the earnings miss and guidance reduction, namely the “speed and magnitude of cost increases late in the quarter were too challenging to fully manage through,” Walmart’s decision to not raise pricing, despite higher costs, aiming at market share gains and “attempts to manage price to offset costs were unsuccessful due to misexecution.”

“Some of these cost pressures should moderate over time, and others will be mitigated through price increases,” the Morgan Stanley analyst further wrote.

WMT Price Action: Shares of Walmart were down 2.78% at $119.07 at the close Thursday. 

Photo courtesy of Walmart.