Tuesday, 21 May 2024
by BD Banks
Walmart (NYSE: WMT) stock had a banner week last week after the retail giant delivered strong first-quarter results. It posted comparable sales growth of 3.8% in its core Walmart U.S. division, gaining market share at a time when much of the retail sector is struggling with inflation and a shift in consumer spending to services like travel and restaurants.
Walmart also delivered solid operating income growth in all three of its operating segments, and growth in areas like e-commerce and advertising also impressed, up 21% and 24%, respectively. The stock finished up 7% Thursday on the news.
Wall Street also took notice of the strong results, with several analysts upgrading their ratings or raising their price targets on the news. One of them was BMO Capital Markets.
Image source: Walmart.
BMO analyst Kelly Bania raised her price target on Walmart from $65 to $75 on the report, implying 16% upside in the stock.
Bania noted that the retailer beat expectations by a wide margin and a better-than-expected gross margin result in all three of its business segments.
She expects the company’s momentum to continue as it narrows its e-commerce losses, improves its gross margins, and benefits from its pricing power.
Walmart is executing as well as it has in a long time, as the company has responded to the threat from Amazon by building out a robust e-commerce business, including thousands of grocery pickup stations that have reinforced its leadership in grocery sales.
Additionally, its advertising is growing rapidly and its core business is strong. Walmart looks well positioned to deliver solid returns for investors.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.