Walmart's Supply Chain Transformation Causes Analysts To Raise Expectations

Shares of Walmart Inc WMT moved sharply higher on Wednesday, after the company announced its growth strategy and next-gen supply chain plans at the 2023 Investment Community meeting.

Telsey Advisory Group On Walmart

Analyst Joseph Feldman maintained an Outperform rating and price target of $160.

“Our meetings and interactions with Walmart’s leadership team increased our visibility and confidence in the company’s ability to grow and gain market share in the years ahead,” Feldman said in a note.

The company plans to increase investments and use of data, software, robotics, and automation to boost “productivity and profitability of its existing and new assets,” the analyst stated. The plans to automate its supply chain “should increase productivity and in-stock levels, lower operating costs and damages, and enhance the customer experience,” he added.

KeyBanc Capital Markets On Walmart

Analyst Bradley Thomas reiterated an Overweight rating, while raising the price target from $165 to $170.

“WMT continues to grow the business through numerous growth initiatives,” Thomas wrote. The company “remains a favorite large-cap idea,” based on its defensive characteristics in a challenging macro environment, market share gains in key categories, and the use of automation and AI in operations, he added.

“Over the next three to five years, we believe the growth algorithm is improving based on the maturation of numerous growth initiatives and the automation of its supply chain,” the analyst further said.

Raymond James On Walmart

Analyst Bobby Griffin reaffirmed an Outperform rating on the stock.

“All in, we came away encouraged by the meetings and conversations with senior leadership, particularly the potential to improve margins (gross and operating income) over the next 3-5 years as automation investments and business mix shifts hit a positive inflection point,” Griffin said.

Several of Walmart’s prior investments are “starting to hit an inflection point, and over the next five years senior leadership detailed a pathway to achieve a ~4% sales CAGR, with EBIT growth faster than sales (the most bullish scenario growing a few hundred bp faster),” he added.

Check out other analyst stock ratings.

Oppenheimer On Walmart

Analyst Rupesh Parikh maintained an Outperform rating and price target of $165.

“A large portion of the event was focused on WMT's supply chain efforts with an increased emphasis on data and technology/automation,” Parikh wrote in a note. “We are upbeat on the potential benefits these efforts can bring over time,” he added.

“Additionally, the company now appears to be on a clearer path towards e-commerce profitability,” the analyst further stated.

Morgan Stanley Group On Walmart

Analyst Simeon Gutman reiterated an Overweight rating and price target of $160.

“Latent margin power could be realized on payback from automation, e-comm & ancillary streams,” Gutman said. “Upside to 8% EBIT growth a positive and suggests breadth of WMT's initiatives may be underappreciated,” he added.

WMT Price Action: Shares of Walmart were flat to $149.68 at the time of publication Thursday.

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