Evercore cuts Walmart stock price target to $107 from $110

On Friday, Evercore ISI updated its stance on Walmart (NYSE:WMT), with analyst Greg Melich adjusting the retail giant’s price target to $107.00, down from $110.00, while reiterating an Outperform rating on the stock. According to InvestingPro data, Walmart’s stock has delivered an impressive 69.9% return over the past year, with current analysis suggesting the stock is trading above its Fair Value. Melich noted that Walmart continues to drive traffic and comparable sales, winning market share, and expanding both EBIT margin and Return on Invested Capital (ROIC) through strategic reinvestment aimed at widening its competitive moat.

The analyst pointed out Walmart’s solid performance, including a 2.8% increase in customer traffic, a 4.6% rise in U.S. comparable sales, and improvements in global EBIT margin by 10 basis points and ROIC by 50 basis points. The company’s financial strength is evident in its $681 billion revenue over the last twelve months and robust gross profit margin of 24.85%. Despite these positive indicators, Melich acknowledged that Walmart is currently navigating several near-term challenges, such as foreign exchange headwinds and the financial impact of investments in Vizio and tax rate changes. These factors have led to a reduction in the forecasted earnings per share (EPS) for calendar years 2025 and 2026, now expected to be $2.65 and $3.10 respectively. InvestingPro subscribers can access 14 additional key insights about Walmart’s financial health and growth prospects.

The revised price target of $107 reflects a valuation of approximately 34.5 times the projected 2026 earnings, adjusted for the lower EPS estimates. Melich highlighted Walmart’s competitive advantages, including strong value proposition, solid merchandising efforts, and enhanced convenience, which he believes will continue to drive market share gains. Additionally, the potential for high-margin revenue streams from advertising fees, benefits from automation, and natural leverage are seen as catalysts for EBIT margin expansion.

The report also mentioned the prospect of a PhonePe initial public offering (IPO) as a significant event, suggesting that the core U.S. business of Walmart is effectively trading at a discount compared to the overall corporation. With Walmart’s stock experiencing a 7% decline yesterday, Melich views this as an opportunity for investors seeking quality growth, underpinned by the company’s leadership in value and innovation. Walmart remains a top pick in Evercore ISI’s "Fab Five" portfolio.

In other recent news, Walmart’s financial performance and future outlook have garnered attention from several analyst firms. KeyBanc Capital Markets raised Walmart’s price target to $105, maintaining an Overweight rating, following the company’s fourth-quarter earnings that exceeded expectations with strong comparable sales growth. Similarly, Stifel increased its price target to $99, highlighting Walmart’s ability to grow operating profit faster than sales, despite issuing conservative guidance. Meanwhile, Citi reiterated a Buy rating with a $120 price target, expressing confidence in Walmart’s market share gains and high-growth business segments.

TD Cowen also maintained a Buy rating with a $110 target, noting Walmart’s technological advancements and solid comparable sales growth as key drivers. JPMorgan kept an Overweight rating with a $112 target, citing Walmart’s slightly better-than-expected earnings per share and improved gross margins. Despite some conservative guidance for the upcoming fiscal year, analysts generally view Walmart’s strategic initiatives and market position positively.

Walmart’s focus on technology and supply chain automation is seen as a significant factor in sustaining its competitive edge. Analysts have pointed out that Walmart’s guidance may be conservative, aligning with the company’s cautious approach in previous years. These developments underscore Walmart’s resilience and strategic positioning in a challenging retail environment.

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