Walmart shares recover after initial drop post-earnings. Here’s why
Walmart’s post-earnings on Thursday decline was short-lived, with analysts and investors betting the company is being overly conservative with its forward guidance. The stock fell as much as 3.6% in the premarket after the retail giant gave disappointing earnings guidance for its current fiscal year. Walmart said it sees earnings per share in a range of $2.75-$2.85, below an LSEG consensus of $2.96 per share. However, shares quickly regained ground and were higher by the opening bell, with analysts not fretting much about the company’s outlook. The stock last traded just above the flatline and rose as much as 2.7%on the day. “The 2026 and 1Q guidance are both below the Street, but we are not overly concerned about that as we suspect that WMT wants to set a beatable bar,” D.A. Davidson analyst Michael Baker said Thursday in a note to clients. “Any weakness on that guide should be bought in our view.” Baker has a buy rating on Walmart and a price target of $135, which signals upside of 6.6% from Wednesday’s close. In early February, Walmart appointed John Furner as CEO, giving the company more reason to exercise caution in the near future, Baker added. The retailer also has a “history of conservatism,” suggesting that its latest lackluster guidance isn’t so bearish after all, Baird analyst Peter Benedict said in a note. He rates the stock as a buy and has a price target of $140, which implies upside of 10%. Flywheel effect to help shares soar Walmart shares have a lot of room to run as the company focuses on increasing its footprint in the retail space by fueling a “flywheel” between its businesses, according to several Wall Street shops. The retailer recently invested in artificial intelligence initiatives to enhance its customer experience, including by striking a deal with OpenAI to allow its visitors to shop with ChatGPT. Walmart has also built out its online marketplace to include more than 500 million items while adding support for one-hour delivery, in addition to creating a multibillion-dollar advertising business that grew 37% in the fiscal fourth quarter. Combined, those efforts put the once largely brick-and-mortar chain in a “unique position to attack market share” from rivals like Amazon and Costco at a time the retail landscape is becoming increasingly competitive, according firm Roth. “Walmart’s automatization opportunities, data capabilities, and consumer proposition are a rare combination that supports market share gains AND increased profitability,” analyst Bill Kirk said Thursday in a note to clients. He reiterated his buy rating on the stock after the earnings release, but his $108 price targe signals a 14.7% drop. In an interview with CNBC, Walmart CFO John David Rainey said the firm’s market share gains were particularly strong in the latest quarter, cutting across all incomes. However, it made some of its gains among more affluent households with more than $100,000 in annual income. The “flywheel/retailer of future story [is] intact and continuing to progress,” Morgan Stanley analyst Simeon Gutman said Thursday in a note to clients. “Our constructive view on WMT is underpinned by the company growing sales faster than the market and its own prevailing run rate – suggesting share gains as the ‘big-get-bigger’ dynamic continues via scale and technology.” Gutman has an overweight rating on Walmart and a $135 price target.
<
