On Thursday, BofA Securities adjusted its outlook on Walmart Inc. (NYSE:WMT), increasing the stock's price target from $75.00 to $85.00 while sustaining a Buy rating. The decision comes as the firm recognizes Walmart's potential for long-term profitability enhancements, particularly through the growth of its high-margin digital advertising and third-party (3P) marketplace seller fees.
The revised price target is based on a 32 times multiple of the projected adjusted earnings per share (EPS) of $2.65 for fiscal year 2026, which is a slight increase of 5 cents from previous estimates.
Previously, the valuation was pegged at 29 times the estimated earnings. BofA Securities highlights the strategic investments Walmart has made in its supply chain, automation, and digital marketplace offerings as key drivers for sales and gross margin improvement.
The analyst from BofA Securities cited improvements in Walmart's core e-commerce losses as a contributing factor to the retailer's promising financial outlook. The integration of digital and physical sales platforms—where customers can purchase items online and avail services in-store—is seen as a strategic move that supports sales and margin growth.
Walmart's ongoing efforts to refine its supply chain and automation capabilities are also expected to bolster its operational efficiency. These improvements, coupled with the expansion of its digital and 3P marketplace offerings, are anticipated to create further upside potential for the company's sales and gross margins.
By maintaining the Buy rating, BofA Securities reaffirms its positive stance on Walmart's stock, reflecting confidence in the company's ability to capitalize on its investments and enhance profitability over the long term. The price target adjustment to $85.00 underscores the firm's belief in Walmart's strategic initiatives and their expected contribution to the company's financial performance in the coming years.
In other recent news, Walmart Inc. reported a surge in its shares following an upward revision of its annual sales and profit forecasts. The company's second-quarter earnings surpassed expectations, with earnings of 67 cents per share and a revenue increase of 4.8% to $169.3 billion. The company also reported a 22% rise in U.S. online sales, a major growth driver for Walmart.
Financial institutions Citi, DA Davidson, and CFRA have maintained a positive outlook on Walmart, with Citi and DA Davidson reiterating a Buy rating and a price target of $75.00. Stifel has also maintained a Hold rating on Walmart shares, with a steady price target of $73.00.
Walmart's board has welcomed Bob Moritz, the retired Chairperson of PricewaterhouseCoopers, who will serve on both the Audit Committee and the Technology and eCommerce Committee. Amid economic uncertainty and potential labor strikes, Walmart has adjusted its holiday promotions and is reducing jobs at its headquarters.
Walmart's success has been attributed to strategic investments in pricing, store quality, technology, and supply chain, which have allowed it to outperform competitors and gain market share. These recent developments reflect the company's resilience and strategic planning in the face of potential economic challenges.
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