UBS cuts Walmart stock price target to $112, maintains Buy rating

On Friday, UBS analyst Michael Lasser adjusted the price target for Walmart (NYSE:WMT) stock, bringing it down to $112 from the previous $113 while sustaining a Buy rating on the shares. According to InvestingPro data, Walmart, currently valued at $774 billion, appears overvalued based on its Fair Value analysis. Despite this, Lasser expressed confidence in the retail giant, noting that Walmart is successfully gaining significant market share and experiencing growth in its alternative business ventures.

Lasser’s analysis points to a continued positive trajectory for Walmart, which has demonstrated remarkable performance with a 69.9% return over the past year and 29.5% growth in the last six months. While there was a slight slowdown in comparable sales and eCommerce growth in the fourth quarter, he emphasized that this deceleration is not indicative of a major slowdown in the future. The company’s performance still surpassed the mid-point of its earnings per share (EPS) guidance by approximately 11%, which was achieved amidst slower sales, with revenue growth maintaining a steady 5.1% pace.

The analyst highlighted Walmart’s ongoing transformation journey, indicating that it is enhancing profitability and simultaneously funding its investments. According to Lasser, the fluctuations seen in Walmart’s quarterly results are part of the transformation process and should be expected. InvestingPro subscribers can access 12 additional expert tips and a comprehensive Pro Research Report that provides deeper insights into Walmart’s transformation strategy and financial health.

The market’s expectations for Walmart’s fourth quarter and 2025 outlook were deemed somewhat overzealous, suggesting that the retailer is being evaluated against a higher standard. This is reflected in the stock’s elevated P/E ratio of 40.2 and P/B multiple of 8.5. Nevertheless, Lasser believes this higher standard is justified, as Walmart possesses the necessary strategies to meet these expectations over an extended period, supported by its 30-year track record of consecutive dividend increases.

In other recent news, Walmart Inc. reported fourth-quarter earnings per share of $0.66, slightly exceeding Wall Street’s expectation of $0.65. Revenue for the period reached $180.6 billion, marking a 4.1% increase and surpassing the anticipated $179.3 billion. Despite these strong results, Walmart’s guidance for fiscal year 2026 was perceived as conservative, with an EPS forecast of $2.50-2.60, below the expected $2.77. In response to these developments, several analysts adjusted their price targets for Walmart. TD Cowen raised its target to $115, maintaining a Buy rating, while RBC Capital Markets lowered its target to $107, citing a recalibration of expectations. BMO Capital Markets and Guggenheim Securities both expressed confidence in Walmart’s ongoing business momentum, maintaining price targets of $110 and $110, respectively. Piper Sandler, meanwhile, reduced its price target to $114, noting the need for a correction in investor expectations. Analysts highlighted Walmart’s growth in areas such as digital sales, advertising, and high-margin sectors like Membership, which are expected to bolster its financial performance moving forward.

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