On Monday, KeyBanc Capital Markets adjusted its outlook on Walmart Inc. (NYSE:WMT), increasing the stock's price target from $82.00 to $86.00. The firm maintained its Overweight rating on the shares, indicating a positive projection of the company's performance.
Walmart has consistently taken more market share in the grocery sector for nine consecutive quarters. Moreover, the company's U.S. e-commerce sales growth has surpassed that of Amazon (NASDAQ:AMZN)'s North America growth over the same period. Walmart's dominance in the rapidly expanding retail advertising network and its significant growth opportunities were highlighted as key factors in the positive assessment.
Investments in Flipkart and PhonePe have been contributing positively to Walmart's international segment, enhancing growth and operating income. The potential monetization of these investments could lead to a reduction in Walmart's valuation by 2-3 points on a price-to-earnings (P/E) basis. Additionally, Walmart's increasing automation within its supply chain is expected to offer substantial opportunities for earnings per share (EPS) growth.
The report also sheds light on Walmart's valuation metrics, noting that the stock is trading at 33.0 times and 29.7 times KeyBanc's 2024 and 2025 EPS estimates, respectively. These figures are compared to the five-year average forward P/E of 23 times. On an enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) basis, the shares trade at 16.2 times and 15.0 times the 2024 and 2025 EBITDA estimates, respectively, against a five-year average of 11 times.
The firm's 12-month price target of $86 is based on approximately 32 times its 2025 EPS estimate, reflecting confidence in Walmart's revenue growth strategy, which aims for about a 4% increase, with operating income growing at an even faster rate. The Overweight rating suggests that KeyBanc views Walmart shares as a favorable investment with the potential for above-average market performance.
In other recent news, Walmart has seen a series of adjustments in its stock price target. Oppenheimer raised its target to $90, citing strong fundamentals and potential for continued sales momentum. BofA Securities also increased its price target to $95, maintaining a buy rating, while Truist Securities upgraded Walmart's stock from Hold to Buy, setting the price target at $89.
Walmart's Mexican subsidiary, Walmex, is currently under the scrutiny of Mexico's antitrust authority, Cofece, over allegations of anti-competitive behavior. The outcome of this investigation could significantly impact Walmex's operations in Mexico.
In a move to cater to the needs of pet owners, Walmart has announced an expansion of its pet care services in southern states including Georgia and Arizona. The company is also working towards achieving sustainability targets in collaboration with Unilever (LON:ULVR), focusing on reducing greenhouse gas emissions and minimizing waste throughout the supply chain.
InvestingPro Insights
Walmart's strong market position, as highlighted in the article, is further supported by recent data from InvestingPro. The company's market capitalization stands at an impressive $643.86 billion, underscoring its dominant role in the retail sector. This aligns with the InvestingPro Tip noting that Walmart is a "Prominent player in the Consumer Staples Distribution & Retail industry."
The article mentions Walmart's consistent market share gains in groceries and e-commerce growth. This is reflected in the company's robust financial performance, with InvestingPro data showing a revenue of $665.03 billion in the last twelve months as of Q2 2025, and a revenue growth of 5.43% over the same period.
KeyBanc's positive outlook on Walmart's earnings potential is echoed in InvestingPro Tips, which indicate that analysts predict the company will be profitable this year and that it has been profitable over the last twelve months. The tip that Walmart is "Trading near 52-week high" corroborates the stock's strong performance mentioned in the article.
It's worth noting that InvestingPro offers 13 additional tips for Walmart, providing investors with a more comprehensive analysis of the company's financial health and market position. These insights can be particularly valuable given the stock's high valuation metrics discussed in the article.
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