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Why Walmart Analysts Are Bullish About The Future Of The Company After Q3 Earnings

Walmart Inc reported better-than-expected third-quarter results Tuesday and raised its outlook for the future 

A sign for Walmart is displayed outside its store in Washington, DC, on November 2, 2022. Shares of Walmart had risen by 0.33% to $147.97 at the time of publication Wednesday. BRENDAN SMIALOWSKI/BENZINGA

Walmart Inc (NYSE: WMT) reported better-than-expected third-quarter results Tuesday and raised its outlook. Here’s what the Street has to say. 

Bank of America analyst, Robert Ohmes, maintained a buy rating on Walmart while raising the price target from $155 to $165.

Walmart’s third-quarter earnings were higher than Street expectations, with U.S. comps ex-fuel of 8.2% reflecting “strength in grocery & private brands as well as +80bps from US ecom (+16% y/y vs. Street +14%),” Ohmes wrote in a note.

He said he expects continued upside “as WMT gains share in grocery supported by its strong value offering that is appealing to a widening range of consumers in a challenging economic environment.”

Morgan Stanley analyst, Simeon Gutman, reiterated an Overweight rating while maintaining a $150 price target. 

“WMT’s pricing power and share gains punctuate stronger Q3 results,” Gutman said in a note. “Inventory/sales back into balance,” with “6-12 month EPS visibility solid,” he added.

Raymond James analyst, Bobby Griffin, reaffirmed an Outperform rating while raising the price target from $150 to $160.

“While near-term macro conditions are likely to remain challenging, WMT’s F3Q23 results given credence to our view that Walmart’s value proposition (now gaining incremental traffic from upper/middle income consumers) alongside best-in-class omni-channel capabilities, financial strength and leadership leave it well positioned for better performance in the coming quarters (conservative F4Q guidance) and next fiscal year (lapping markdown and supply chain cost),” Griffin stated.

BMO Capital Markets analyst, Kelly Bania, maintained an Outperform rating while raising the price target from $160 to $165.

Although Walmart raised its guidance for the fourth quarter, it “still appears very conservatively planned,” Bania said.

“As WMT moves past the near-term, non-structural inventory-related challenges, we continue to expect the focus to return to WMT’s higher-margin initiatives, such as advertising, and as a result the questions will likely become centered around the appropriate GM% for F24,” she added.

A cashier scans items at a Walmart store in Burbank, California on August 15, 2022. Walmart gains share in grocery supported by its strong value offering that is appealing to a widening range of consumers in a challenging economic environment. ROBYN BECK/BENZINGA

RBC Capital Markets analyst, Steven Shemesh, reiterated an Outperform rating while raising the price target from $151 to $163.

“The read through for the consumer is somewhat encouraging, but it’s important to keep in mind that inflation, a more promotional environment, and trade down into WMT supported the result,” Shemesh said in a written statement.

“Nonetheless, WMT is well-positioned to benefit from the deteriorating macro backdrop,” he added.

KeyBanc Capital Markets analyst, Bradley Thomas, reaffirmed an Overweight rating while raising the price target from $155 to $165.

“Walmart continues to gain market share in grocery, with a strong 8.2% comp at Walmart U.S.,” Thomas mentioned. “Looking ahead, we still see risk of elevated promotions in our holiday outlook but believe Walmart is well-positioned for share gains as consumers weather macroeconomic uncertainty,” he added.

Telsey Group analyst, Joseph Feldman, maintained an Outperform rating while raising the price target from $160 to $165.

“Walmart commented that 4Q22 is off to a good start,” Feldman stated. “The company also provided better-than-anticipated 4Q22 earnings guidance, although we still believe that the Walmart US comp guidance of 3.0% could prove conservative, given strong current business trends,” he further wrote.

Shares of Walmart had risen by 0.33% to $147.97 at the time of publication Wednesday.

 

Produced in association with Benzinga.

Edited by Alberto Arellano and Joseph Hammond

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