Walmart shares seen gaining 30% in next year after $100 bn rally: Report

By Katrina Compoli

Walmart Inc. shares could surge more than 30% in the next 12 months as the shopping behemoth continues to gain market share even as grocery inflation eases, according to Piper Sandler.

Walmart has been on a remarkable run, outperforming competitor Target Corp. and a broad gauge of retailers this year as Wall Street bets that its discount model and strength in groceries will set it apart amid economic uncertainty. After surging 34% from a June 2022 trough and adding more than $100 billion in market value, its shares closed Monday near their all-time high set in April last year. 

There’s more upside to come, according to analyst Edward Yruma. He upgraded the retailer to overweight in a Monday note and boosted his price target to a Street-high $210 from $145 — well above Monday’s closing price of $159.30. 

While Walmart is well positioned in periods of elevated inflation as shoppers trade down from costlier retail peers, “we believe that a gradual intensification of promos augurs well for Walmart given its sharp focus on price,” Yruma wrote. 

The average price target among analysts tracked by Bloomberg stands at $170. Yruma’s upgrade propelled Walmart’s consensus rating — a proxy for its ratio of buy, hold and sell recommendations — to the highest level since March 2010. Walmart shares slipped as much as 0.5% on Tuesday to $158.45. 

Yruma’s optimism comes after analyzing nearly 400 of the retailer’s “rollbacks,” temporary price reductions on items. He found Walmart’s regular and rollback prices were more competitive than peers, with standard prices 12% below Kroger Co.’s and rollback prices 19% lower. Store checks signaled a significant year-over-year increase in rollbacks, which he expects will intensify.

The analyst also touted a turnaround at Sam’s Club, highlighting the warehouse chain’s seven consecutive quarters of better same-store sales growth than rival Costco Wholesale Corp.

Walmart is expected to report fiscal second-quarter results before the market opens August 17. Jefferies analyst Corey Tarlowe wrote last week that the retailer’s daily active user growth has been strong throughout the summer and continued to accelerate during the Walmart+ Week shopping event earlier this month, calling it a positive for second-quarter revenue.