Morgan Stanley's Simeon Gutman lowered their price target on Walmart (NYSE: WMT) by 1.2% from $170 to $168 on November 17, 2023. The analyst maintained their Strong Buy rating on the stock.
This adjustment comes in response to Walmart's mixed results for the third quarter of fiscal year 2024, which were reported on November 16, 2023. Despite beating expectations for both earnings per share (EPS) and revenue, Gutman expressed caution due to the company's revised guidance for fiscal year 2024 and the potential impact on performance in fiscal year 2025. The analyst stated, "there is limited opportunity for positive growth in estimates because of the possibility of negative FY 2025 performance." However, Gutman also acknowledged that Walmart has the potential to generate favorable returns from its current position, citing market share gains and profit inflection expected to persist in fiscal year 2025.
For the third quarter of fiscal year 2024, Walmart reported EPS of $1.53, in line with the Zacks Consensus Estimate but beating the previous year's third-quarter EPS of $1.50 by 2%. The company also reported revenue of $160.8 billion, surpassing the Zacks Consensus Estimate of $159.5 billion, representing a 5.2% increase from the previous year's third-quarter revenue of $152.81 billion. Net sales for the quarter reached $159.44 billion, reflecting a 5.3% year-over-year growth. Furthermore, Walmart's operating income surged by 130% year-over-year to $6.20 billion.
Looking ahead, Walmart's management provided guidance for fiscal year 2024, including an EPS range of $6.40 to $6.48, net sales growth of 5% to 5.5%, and operating income growth of 7% to 7.5%. President and CEO Doug McMillon expressed optimism, stating, "We had strong revenue growth across segments for the quarter, and we’re excited to get an early start to the holiday season." McMillon further emphasized Walmart's commitment to providing affordable Thanksgiving meals and great prices on various products during the holiday period.
In addition to Morgan Stanley's rating adjustment, other analysts have also updated their outlook on Walmart on November 17, 2023. Mark Astrachan from Stifel Nicolaus lowered their price target by 1.2% from $171 to $169 and maintained a Hold rating on the stock. Scot Ciccarelli of Truist Securities raised their price target by 1.2% from $168 to $170 while also maintaining a Hold rating. Greg Melich from Evercore ISI Group lowered their price target by 5.3% from $187 to $177 but maintained a Buy rating on the stock.
Currently, approximately 84.2% of top-rated analysts view WMT as a Strong Buy or Buy, while 15.8% consider it a Hold. No analysts recommend or strongly recommend selling the stock.
The consensus forecast among analysts is that Walmart's upcoming fiscal year will deliver earnings per share (EPS) of $5.93. If these predictions hold true, WMT's next yearly EPS will increase by 14% on a year-over-year basis.
Despite the recent rating adjustments, Walmart's stock has seen a year-over-year increase of 5.1%. However, it is trailing behind the S&P 500, which has experienced a 14% gain during the same period.
Simeon Gutman, the Morgan Stanley analyst responsible for the rating adjustment, is ranked in the bottom 1% out of 4,399 Wall Street analysts by WallStreetZen. Gutman specializes in sectors such as Energy and Industrials.
Walmart Incorporated operates various retail, wholesale, and other units both domestically and internationally through its three segments: Walmart U.S., Walmart International, and Sam's Club. The company offers a wide range of products through different store formats, including supercenters, supermarkets, hypermarkets, warehouse clubs, discount stores, and e-commerce websites. Founded in 1945, Walmart is headquartered in Bentonville, Arkansas.
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