WMT: AI Shopping Agent And CEO Transition Will Drive Stable Performance Ahead

Walmart's analyst price target was raised significantly, from $117 to $130. Analysts pointed to robust quarterly results, continued share gains across product categories, and overall business momentum as the primary drivers behind the upward revision.

Analyst Commentary

Walmart's latest quarterly performance and revised outlook have sparked a considerable number of reactions across Wall Street, leading to an array of both optimistic and cautious perspectives from analysts.

• Bullish analysts point to Walmart's consistent outperformance versus other large retailers, highlighting share gains in grocery and general merchandise as evidence of the retailer's strong execution and relevance across income segments.
• Several upward price target revisions reflect heightened confidence that Walmart's ability to capture higher-income households while defending value for budget-conscious consumers will support ongoing sales and margin growth.
• Analysts see momentum in alternative revenue streams, such as e-commerce and advertising, which are growing at an impressive pace and are expected to drive incremental margin expansion through 2026 and beyond.
• The elevation of John Furner as CEO is regarded as a smooth transition that ensures continuity, supporting expectations for strategic consistency and ongoing business momentum.

• Some cautious analysts note moderation in spending among lower-income consumers, which could pressure growth if economic headwinds persist or intensify.
• Persistent inflationary trends, especially in general merchandise, pose risks around pricing power and demand elasticity, which could affect value perceptions among Walmart's core customer base.
• While Walmart’s market share gains and solid comps remain a highlight, the competitive grocery landscape and potential disinflation in the sector may present margin and growth risks moving forward.
• Certain outlooks raised concerns about pressures from broader retail industry dynamics, including government program changes like SNAP benefits, which could impact traffic and sales in key departments.

What's in the News

• Walmart is testing ads within its new AI shopping agent, Sparky, aiming to create a new revenue stream from chat-based shopping experiences (The Wall Street Journal).
• The company is in talks to acquire Israeli startup R&A Data to better combat scams and counterfeits on its online marketplace (CNBC).
• Plans are underway to switch Walmart's primary stock listing from the New York Stock Exchange to the Nasdaq Global Select. This change is expected to take effect in December 2025.
• Walmart began a new strategy for raising hourly employee wages based on factors such as attendance, teamwork, and store performance (Business Insider).
• Walmart has paused job offers to candidates requiring H-1B visas due to recent changes in visa fee policies (Bloomberg).

Valuation Changes

• The Fair Value Estimate has risen modestly, increasing from $113.78 to $118.38 per share.
• The Discount Rate has fallen slightly, moving from 7.02% to 7.01%, reflecting a minor decrease in perceived risk.
• Revenue Growth projections have increased, now at 4.89% compared to the previous 4.63%.
• The Net Profit Margin has edged up, climbing from 3.41% to 3.44%.
• The Future P/E Ratio is projected to be slightly higher, up from 40.09x to 40.54x.