Jefferies maintains Walmart stock Buy rating, $120 price target

On Tuesday, Jefferies analyst Corey Tarlowe maintained a Buy rating on Walmart stock (NYSE:WMT) with a $120.00 price target. With a market capitalization of $710 billion, Walmart stands as a dominant force in retail. Tarlowe highlighted the upcoming Walmart Investment Community Meeting, scheduled for April 8-9, as a potential catalyst for investor understanding of the company’s growth strategies. The meeting is expected to showcase Walmart’s new technology, which is instrumental for the expansion of its e-commerce, stores, and membership clubs. According to InvestingPro analysis, Walmart’s current valuation suggests the stock is trading above its Fair Value, though analysts maintain a bullish outlook with multiple Buy ratings.

Tarlowe anticipates that the event will provide clarity on how Walmart is advancing its operating income (OI) at a faster pace than sales. The company’s financial strength is evident in its impressive $681 billion in revenue and $42.3 billion in EBITDA over the last twelve months. However, he does not foresee a long-term algorithm or near-term financial update being presented, unlike the situation two years prior when Walmart’s CFO suggested OI growth could surpass previous expectations. InvestingPro subscribers can access 12 additional key insights about Walmart’s financial health and growth prospects through exclusive ProTips.

The Investment Community Meeting will feature tours of stores, clubs, and distribution and fulfillment centers, as well as meetings with executives. Looking beyond the meeting, Tarlowe noted that the next significant event for Walmart would likely be Easter on April 20. He recalled that last year, Walmart experienced a robust Easter season that contributed to strength across various categories, including general merchandise.

Despite potential pressures on sales and margins across the retail sector, due to factors like record cold weather, flooding in Kentucky, and a later Easter this year compared to March 31 in 2024, Tarlowe believes Walmart is well-positioned to navigate these challenges. He cited Walmart’s competitive pricing, particularly in private label products, its scaling e-commerce business, and growing alternative revenue streams as advantages.

While the Jefferies Walmart margin indicator, which includes data only through February, shows some sequential pressure on first-quarter margins, Tarlowe reiterated his estimates, given that there is approximately one month remaining in the quarter. Despite these short-term pressures, Walmart has demonstrated remarkable stability, maintaining dividend payments for 53 consecutive years and achieving a robust 48% total return over the past year. For detailed analysis of Walmart’s financial metrics and future prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro.

In other recent news, Walmart de México y Centroamérica announced a significant investment plan of over $6 billion in Mexico for 2025. This initiative aims to expand its store formats, including Bodega Aurrera and Walmart Supercenter, and create approximately 5,500 direct jobs. Meanwhile, Erste Group analysts downgraded Walmart’s stock rating from "Buy" to "Hold," citing concerns over its valuation despite the company’s positive sales and operating margin growth in the last quarter. Walmart forecasts revenue growth of 3% to 4% year-over-year, with operating income expected to increase slightly faster. Additionally, Walmart’s partnership with Klarna, replacing Affirm as its buy-now-pay-later provider in the U.S., marks a strategic shift in its financial services. Klarna will become Walmart’s exclusive BNPL loan provider by the holiday season. In related developments, Walmart has been engaged in discussions with China’s Ministry of Commerce over price cut requests amid heightened tariffs. The company continues to expand in mainland China, particularly under the Sam’s Club model. These recent developments highlight Walmart’s strategic moves in both domestic and international markets.

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