Street Calls of the Week
Investing.com - Morgan Stanley (NYSE:MS) has maintained its Overweight rating and $115.00 price target on Walmart (NYSE:WMT), the $816 billion retail giant, following the retailer’s second-quarter earnings report, citing solid top-line growth despite profitability concerns. According to InvestingPro analysis, the stock is currently trading near its 52-week high with a P/E ratio of 43.8x.
The investment firm noted that Walmart’s profit and incremental margin performance fell short of expectations in Q2, while acknowledging that revenue growth remained strong across all segments of the business. The company has maintained a steady 4.2% revenue growth rate, with total revenues reaching $685 billion in the last twelve months.
Morgan Stanley highlighted several factors contributing to the profit miss, including higher insurance claims that reduced operating income growth by 5.6% and elevated strategic investments in the International division.
Despite these challenges, the firm emphasized that Walmart’s U.S. division showed solid performance with operating income growing 8% when adjusting for insurance claims, which suggests the company’s core business remains strong.
Morgan Stanley maintained its bullish outlook on Walmart, indicating that the retailer’s faster top-line and operating income growth narrative remains intact in its largest business segment.
In other recent news, Walmart’s second-quarter earnings report revealed a slight miss in earnings per share (EPS) expectations, posting $0.68 against the anticipated $0.73. However, the company exceeded revenue forecasts, achieving $177.4 billion compared to the expected $174.4 billion. Despite the earnings miss, analysts maintain a positive outlook on the retailer. Evercore ISI reiterated its Outperform rating with a price target of $110.00, highlighting Walmart’s robust revenue performance. DA Davidson also maintained a Buy rating with a $117.00 price target, emphasizing the strong top-line metrics despite mixed quarterly results. Truist Securities upheld its Buy rating and $111.00 target, noting Walmart’s continued strong sales performance, including a 4.6% increase in U.S. comparable sales. BMO Capital echoed the positive sentiment, keeping its Outperform rating and $110.00 target, suggesting that underlying earnings were closer to expectations when excluding certain charges. These developments reflect analysts’ confidence in Walmart’s overall performance despite the earnings per share shortfall.
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