On Tuesday, HSBC updated its stance on Walmart Inc. (NYSE:WMT), raising the retail giant's price target to $81 from the previous $70, while keeping a Buy rating on the stock. This adjustment follows Walmart's first-quarter results for fiscal year 2025, which surpassed expectations.
The firm has increased its earnings per share (EPS) forecast for Walmart for fiscal year 2025 to $2.44, up from $2.37. The revision comes after Walmart indicated it anticipates its performance to be at the upper end of its EPS guidance, which was set at $2.32. The new EPS estimate by HSBC now stands 5% above the company's guidance and 1% above the consensus estimates.
HSBC also made slight modifications to its projections for fiscal years 2026-27. The raised price target to $81 is based on the rollover of the target price to fiscal year 2026 estimates, employing a price-to-earnings (PE) multiple of 29.5 times, consistent with Walmart's post-pandemic average. This calculation uses an EPS of $2.74, an increase from the earlier projected $2.30 for fiscal year 2025.
The analyst noted that Walmart has had a robust start to fiscal year 2025, with a solid beat in sales and earnings for the first quarter. The expectation is that this positive trend will carry on throughout the year. Nonetheless, the analyst also highlighted potential risks, including intensified competition from omnichannel and online retailers, a potential slowdown in sales performance both domestically and internationally, as well as the possibility of higher-than-anticipated food inflation.
In other recent news, Walmart Inc. continues to receive positive feedback from various brokerage firms. TD Cowen maintained its Buy rating and a $75.00 price target, emphasizing Walmart's efforts to boost market share and customer retention through initiatives like the BetterGoods owned brand and expansion of the third-party digital marketplace.
Similarly, BofA Securities and Telsey Advisory Group also maintained their Buy ratings on Walmart, each with a $75.00 price target. These firms highlighted Walmart's merchandising initiatives and potential for profitable multi-year growth. Stifel, however, reaffirmed a Hold rating on Walmart shares with a $69.00 price target, citing the company's focus on private brands and digital initiatives.
In recent developments, Walmart has been implicated in the opioid crisis litigation, with lawsuits against pharmaceutical manufacturers, distributors, and pharmacies resulting in a $2.13 billion legal fee pool. This litigation includes a variety of entities accused of contributing to a widespread opioid addiction epidemic.
In terms of product offerings, Walmart is expanding its range through third-party sellers and the introduction of its new 'bettergoods' brand. The company's ongoing efforts to integrate and enhance its physical and digital operations reflect its adaptive strategy in a dynamic retail environment.
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