HSBC downgrades this retail giant after earnings, flags weaker outlook
HSBC believes that softer guidance and reduced momentum limit upside for Walmart . The bank downgraded the big box retailer to a hold rating from buy. Analyst Joe Thomas raised his price target to $131 from $122, though that only implies upside of 5% from here. The downgrade comes after Walmart reported a fourth-quarter earnings and revenue beat . However, its current-quarter earnings outlook fell short of Wall Street’s expectations. Thomas acknowledged Walmart’s “solid” results, applauding its strong e-commerce performance and growing volume. The analyst wrote that “there weren’t too many weak spots in Q4 results.” WMT 1Y mountain WMT 1Y chart Another bright spot Thomas applauded on the report was excitement on e-commerce, which grow 24% globally for Walmart. However, he finds the company’s 2026 outlook “surprisingly weak, given solid trends.” “Despite solid results all around, guidance was weak, and we have trimmed our forecasts as a result,” he added, although he caveated that this might also reflect a degree of conservatism from Walmart’s new management team. Thomas cited a lack of immediate momentum as the reason for the rating downgrade, as well as the company’s recent run-up in price. “The company is doing a lot right and the shares have been good performers. However, the valuation discount versus Costco has now largely been eliminated, despite slightly slower forecast consensus EPS growth. The slightly weaker-than-expected guidance for 2027 also suggests that near-term momentum for our forecasts may be limited,” he wrote. Shares of Walmart have surged 28% over the past 12 months and have popped 12% this year.
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