Evercore lifted its price target to $153 from $130 while maintaining an Outperform rating. The firm pointed to Walmart Digital’s 27% growth reaching approximately $100 billion in the U.S. and $150 billion globally as evidence the company’s 6% earnings per share growth guidance may be conservative, News.az reports, citing Telegraph.
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The analyst noted that faster growth in higher-margin segments including advertising, membership fees, and digital operations with double-digit variable margins should position Walmart to grow even as other retailers face challenges. Fourth-quarter results showed accelerating traffic of 2.6%, U.S. comparable sales of 4.6% with over 500 basis points from e-commerce, and 10 basis points of global operating income margin expansion.
Evercore highlighted Walmart Plus membership, currently in approximately 20 million households, as comparable to Amazon Prime in 2014. The firm raised its base case to $135 from $130, citing favorable business mix including 30% growth of a $6.4 billion global advertising business and double-digit growth in marketplace fulfillment income to $4.3 billion from Walmart Plus.
The firm adjusted its earnings per share estimates down 1% to $3.00 and $3.35 respectively to account for liability claims, reduced other income, and grocery price investments. Evercore removed its Underperform tactical allocation position issued on February 17 after the stock declined 7% while the S&P 500 rose 1%.
Barclays maintained its Overweight rating and raised its price target to $132 from $125. The firm noted strong unit share gains driven by aggressive price investments, acceleration in e-commerce penetration including WMT Connect growth, and strong underlying flow-through masked by tariffs that will anniversary in coming months.
Barclays said guidance came in at $2.96 as expected but sees potential for earnings per share of $3.15 or higher throughout the year while still signaling management is targeting stronger flow-through.
