Wall St futures flat amid US-China trade jitters; bank earnings in focus
On Thursday, Bernstein analysts, led by Zhihan Ma, revised their price target for Walmart (NYSE:WMT) shares, reducing it to $107 from the previous target of $113, while maintaining an Outperform rating on the company's stock. With a substantial market capitalization of $718 billion and an InvestingPro Financial Health score rated as "GOOD," Walmart remains a prominent player in the Consumer Staples sector. The stock currently trades at a P/E ratio of 36.9x, suggesting premium valuation levels. This adjustment follows Walmart's investor meeting held on April 8-9 in Dallas, Texas, where the company presented its omni-channel capabilities, discussed current market trends, and outlined its long-term objectives.
Despite the reduction in the price target, the analysts remain positive about Walmart's prospects. They were reassured by the company's commitment to its fiscal year 2026 guidance, which was initially considered conservative. The company's strong fundamentals are evident in its impressive $681 billion in revenue and consistent dividend payments, which it has maintained for 53 consecutive years. For deeper insights into Walmart's financial metrics and growth potential, InvestingPro offers comprehensive analysis through its Pro Research Report, one of 1,400+ detailed company analyses available to subscribers. However, Walmart now anticipates a broader range of outcomes for its first-quarter earnings before interest and taxes (EBIT), which are likely to fall short of the previously projected 0.5-2.0% constant currency growth due to various challenges including an unfavorable product mix, pricing investments, and casualty claims estimated at approximately $200 million.
The Bernstein analysts have updated their forecasts in light of these headwinds, expecting a 4% decline in Walmart's first-quarter EBIT. Nonetheless, they project a 4% increase in annual revenue and a 7% rise in EBIT, which is 120 basis points above the consensus. Their endorsement of Walmart's stock is based on the retailer's demonstrated ability to navigate through tariff-related issues and its strategies for managing its profit and loss statement.
In response to the anticipated impact of casualty claims on the company's adjusted operating income, Bernstein has adjusted its first-quarter earnings projections. Additionally, they have recalibrated their price-to-earnings (P/E) multiple for Walmart from 35.5x to a slightly lower 34.0x. As a result of these revisions, the analysts have also lowered their earnings per share (EPS) estimate for the fifth through the eighth quarters to $3.16. Despite these adjustments, Bernstein's stance on Walmart remains optimistic, reflected in the Outperform rating and the revised price target of $107.00. According to InvestingPro data, analyst targets for Walmart range from $63 to $120, with a strong consensus recommendation of 1.53 (where 1 is Strong Buy and 5 is Strong Sell), suggesting continued confidence in the company's outlook.
In other recent news, Walmart Inc. has announced that its U.S. eCommerce business is on track to become profitable this year, as highlighted during its investment meeting. The company reported a 9.1% increase in net sales and a 17% rise in operating income for its international segment in constant currency over the past fiscal year. Additionally, Walmart International's eCommerce sales have grown by 45% over the past two years, and the segment is on course to meet its 2023 target of $200 billion in gross merchandise value. Analysts from Telsey Advisory Group maintained an Outperform rating with a $115 price target for Walmart, citing the company's strategic initiatives and digital advancements as key growth drivers. Citi analysts also reiterated their Buy rating with a $120 price target, emphasizing Walmart's unmatched omni-channel experience and technological edge over competitors. Meanwhile, Goldman Sachs analysts reaffirmed their Buy rating with a $106 price target, noting the positive inflection in Walmart's U.S. eCommerce business. Walmart continues to focus on operational advancements, including leveraging data and automation to improve inventory management and reduce costs. The company's leadership has expressed confidence in sustaining growth through strategic investments in digital and newer business ventures.
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