Walmart stock rating reiterated at Buy by UBS with $110 price target

Investing.com - UBS has reiterated its Buy rating on Walmart (NYSE:WMT) with a price target of $110.00, despite what the firm describes as a market misinterpretation of the retailer’s second-quarter results. The retail giant, currently valued at $782.56 billion, appears overvalued according to InvestingPro Fair Value metrics.

UBS analyst Michael Lasser noted that Walmart’s U.S. comparable sales remained steady at 4.6%, driven by accelerating e-commerce growth. The retailer also saw quarter-over-quarter acceleration in general merchandise sales, contributing to its impressive $693.15 billion in revenue over the last twelve months. With 11 analysts recently revising earnings upward, InvestingPro analysis reveals additional insights in its comprehensive Pro Research Report.

The firm highlighted that Walmart took a conservative approach to establishing reserves for general liability claims, which UBS suggests could potentially lead to future upside.

UBS pointed out that the combination of advertising revenue, membership income, and marketplace fees contributed to 50% of Walmart’s ongoing operating income growth during the quarter.

The analyst commented that the market appeared unwilling to analyze the nuances of retail earnings reports, missing key positive indicators in Walmart’s performance that separated one-time factors from ongoing business trends.

In other recent news, Walmart’s second-quarter earnings report has been a focal point for analysts. Despite falling short of consensus expectations for earnings per share, KeyBanc maintained its Overweight rating with a $110 price target, attributing the shortfall to temporary factors like general liability claims. Bernstein raised Walmart’s price target to $117, highlighting the company’s 5.6% net sales growth, which surpassed previous guidance. However, Bernstein noted that EBIT growth was limited due to higher self-insured general liability claims. Telsey Advisory Group increased its price target to $118, citing Walmart’s development of a "powerful ecosystem" that extends beyond traditional retail. Mizuho (NYSE:MFG) reiterated an Outperform rating with a $115 target, emphasizing that the earnings miss does not alter their positive outlook. Bank of America Securities maintained a Buy rating and set a $120 price target, pointing to strong grocery performance and share gains. These developments reflect varied analyst perspectives on Walmart’s recent performance and future potential.

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