Walmart Misses Investor Expectations: Analyst Lowers Price Target

BMO Capital's Kelly Bania lowered their price target on Walmart (NYSE: WMT) by 2.8% from $180 to $175 on 2023/11/17. The analyst maintained their Buy rating on the stock. This adjustment in the price target came after the retail giant released its Q3 2024 earnings report the previous day. Bania expressed disappointment with Walmart's quarterly results and management's revised guidance, stating that they failed to meet investors' "high expectations," particularly in the American markets.

Despite the disappointing aspects, Bania did highlight some positive aspects of Walmart's performance. The analyst pointed out "bright spots" such as the continual increase in traffic, e-commerce, and advertising. However, the overall sentiment from Bania seemed to be that the low-end profitability growth guidance from management was underwhelming.

In the Q3 2024 report, Walmart announced earnings per share (EPS) of $1.53, which matched the Zacks Consensus Estimate but surpassed Q3 2023's $1.50 by 2%. The company also reported revenue of $160.8 billion, surpassing the Zacks Consensus Estimate of $159.5 billion and showing a 5.2% increase compared to Q3 2023's $152.81 billion. Net sales for the quarter totaled $159.44 billion, marking a 5.3% year-over-year increase. Furthermore, Walmart's operating income saw a significant surge, rising by 130% year-over-year to $6.20 billion.

Looking ahead, Walmart's management provided guidance for the full year of 2024. They anticipate EPS in the range of $6.40 to $6.48, with net sales growth expected to be between 5% and 5.5%. Additionally, the company projects operating income growth of 7% to 7.5%. President and CEO Doug McMillon expressed optimism for the holiday season, highlighting the company's efforts to provide affordable options for customers across various product categories.

In addition to BMO Capital's Kelly Bania, other analysts also updated their ratings and price targets for Walmart on 2023/11/17. Mark Astrachan from Stifel Nicolaus lowered their price target by 1.2% from $171 to $169 while maintaining a Hold rating on the stock. Scot Ciccarelli from Truist Securities, on the other hand, raised their price target by 1.2% from $168 to $170, also maintaining a Hold rating. Simeon Gutman of Morgan Stanley lowered their price target by 1.2% from $170 to $168 but kept their Strong Buy rating intact.

According to the latest data, 84.2% of top-rated analysts currently rate Walmart as either a Strong Buy or Buy, while 15.8% consider it a Hold. Notably, no analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Walmart's upcoming year will deliver earnings per share (EPS) of $5.93. If the analysts' predictions hold true, this would represent a year-over-year increase of 14%.

In terms of stock performance, Walmart has seen a 5.1% increase year-over-year. However, during the same period, the stock has trailed behind the S&P 500, which has experienced a more significant gain of 14%.

Kelly Bania, the BMO Capital analyst who revised their price target for Walmart, is ranked in the top 12% of Wall Street analysts by WallStreetZen. With an average return of 8.2% and a win rate of 62.3%, Bania specializes in the Consumer Cyclical and Consumer Defensive sectors.

Walmart Incorporated operates various retail, wholesale, and other units both in the United States and internationally. The company is divided into three segments: Walmart U.S., Walmart International, and Sam's Club. Walmart's operations include supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, membership-only warehouse clubs, and e-commerce websites. Founded in 1945, the company is headquartered in Bentonville, AR.

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