Bernstein Maintains Hold Rating on Walmart Despite Positive Q2 2024 Performance

Bernstein's Dean Rosenblum raised their price target on Walmart (NYSE: WMT) by 3.8% from $159 to $165 on 2023/08/18. The analyst maintained their Hold rating on the stock. In reference to Walmart's Q2 2024 results, released on August 17, 2023, Rosenblum highlighted the company's strong performance but drew attention to the stock price decline post-release. The analyst noted Walmart's struggle to meet earnings per share (EPS) estimates and achieve a multiple that would justify an upgrade from Bernstein's Hold rating.

For Q2 2024, Walmart reported impressive numbers. The company's EPS of $1.84 surpassed the Zacks Consensus Estimate of $1.69 and showed a 4% increase compared to Q2 2023's $1.77. Additionally, Walmart's revenue of $161.6 billion exceeded the Zacks Consensus Estimate of $159.8 billion and displayed a 5.7% growth compared to Q2 2023's $152.9 billion.

Looking ahead, Walmart's management provided guidance for Q3 2024 and FY 2024. For Q3 2024, the company expects a 3% revenue growth on a constant currency basis and an EPS range of $1.45 to $1.50. For FY 2024, Walmart anticipates a 4% to 4.5% revenue growth on a constant currency basis, an improvement from their previous guidance of 3.5%. The company also raised their EPS expectations to a range of $6.36 to $6.46, up from the prior guidance of $6.10 to $6.20.

Walmart's President and CEO, Doug McMillon, expressed optimism about the company's performance. He noted that customers and members worldwide prioritize value and convenience, leading to increased shopping across various channels including physical stores, Sam's Clubs, and eCommerce. McMillon highlighted the 24% global growth in eCommerce and the positive results in general merchandise, exceeding initial expectations for the quarter. He also mentioned the company's favorable inventory position and positive outlook for the second half of the year.

In addition to Dean Rosenblum's analysis, other analysts updated their ratings and price targets for Walmart on August 18, 2023. Raymond James' Bobby Griffin raised their price target by 6.3% to $160 and maintained their Buy rating on the stock. Truist Securities' Scot Ciccarelli raised their price target by 1.2% to $166 while maintaining their Hold rating. Roth MKM's Bill Kirk raised their price target by 5.9% to $169 and maintained their Strong Buy rating.

Currently, 84.2% of top-rated analysts consider Walmart a Strong Buy or Buy, while 15.8% rate it as a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts suggests that Walmart's upcoming year will deliver an EPS of $5.08. If these analysts are correct, Walmart's next yearly EPS will increase by 22.5% year-over-year.

In terms of stock performance, Walmart has seen a year-over-year increase of 11.6%, outpacing the 2.2% growth of the S&P 500 during the same period.

Dean Rosenblum, the analyst behind the recent price target update, is ranked in the top 40% of Wall Street analysts by WallStreetZen. With an average return of 3.9% and a win rate of 66.7%, Rosenblum specializes in the Consumer Defensive and Consumer Cyclical sectors.

Walmart Incorporated, founded in 1945 and headquartered in Bentonville, AR, operates retail, wholesale, and other units across the U.S. and internationally. The company's three segments include Walmart U.S., Walmart International, and Sam's Club. Walmart's operations span various retail formats, including supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, membership-only warehouse clubs, and eCommerce websites.

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