Walmart's E-commerce Profitability, New Product Lines Impress Analysts After Shareholder Event

Walmart Inc WMT has had a very successful 2024; three analysts weighed in on the company’s future potential following the Arkansas-based retailer’s first-quarter earnings and shareholder event.

The Walmart Analysts: In a note on June 7, Oppenheimer maintained Walmart with an Outperform rating and raised the price target from $69 to $75. In a note on Monday, Bank of America maintained its Buy rating with a price target of $75. Telsey Advisory Group analysts maintained its Buy rating and increased its price target to $75.

Oppenheimer Takeaways: Oppenheimer analysts are encouraged by the company’s foray into privately labeled goods with “bettergoods,” the proliferation of AI walkout technology in Sam’s Club locations, and future e-commerce profitability.

“We continue to play for a multi-year profit boom driven, in our view, by strong management execution, momentum in
WMT’s core geographies, and further scaling of higher-margin alternative revenue streams (media, membership, marketplace, etc.),” the report said. “From here, we expect beat-and-raises to continue and believe WMT’s premium valuation can hold.”

Bank of America Takeaways: Bank of America analysts are also optimistic about Walmart’s e-commerce profitability.

“Store remodels, online SKU expansion and express delivery (3 hours or less) are driving broad-based strength and WMT+ participation (even with lower incomes). Delivery is now larger than pickup and store-fulfilled ecom (now over 1/2 of WMT ecom) is seeing the strongest growth,” the report said.

Bank of America analysts similarly noted “bettergoods” as a step in the right direction for Walmart as “the largest private brand food launch in 20 years.” The note highlighted the strong customer response to the products.

TAG Takeaways: Telsey analysts highlighted increasing e-commerce profitability and “bettergoods,” but also spoke more broadly.

“We believe Walmart is well-positioned to gain market share across all income groups—regardless of the environment—given its focus on value, flexibility,and convenience,” the note said. “The expansion of quality merchandise, including premium and private brands, as well as convenience via Walmart+ membership and digital/marketplace, should help gain and retain share among higher income households.”

The analysts also pointed out the international market, particularly India and China, as promising as a future growth driver.

WMT Price Action: Walmart traded at $66.70, up 1.2% at the time of writing.

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Walmart Photo by Sundry Photography on Shutterstock