UBS Maintains Buy Rating on Walmart Stock Ahead of Q4 Earnings, Sets Price Target of $190.00
Investment bank UBS has upheld its Buy rating on Walmart stock and has set a price target of $190.00 ahead of the retail giant’s Q4 earnings report. UBS remains optimistic about Walmart’s ability to gain market share and stay resilient in the face of economic challenges that are impacting the retail sector.
The optimism expressed by UBS comes alongside concerns about the health of the U.S. consumer, potential food price deflation, fluctuating demand for general merchandise, distractions from the U.S. election, and high interest rates. Despite these concerns, UBS believes that Walmart has defensive qualities and key drivers that could lead to a rebound in discretionary spending.
UBS points to several factors that it believes could contribute to Walmart’s success. These include the expansion of its marketplace, increased revenue from high-margin advertising, and advancements in automation within its fulfillment operations. UBS draws a parallel between Walmart and Apple, suggesting that Walmart’s growing alternative profit sources could result in an expanded valuation multiple.
Looking ahead to 2024, UBS expects Walmart to focus on these high-margin revenue streams, with earnings guidance potentially falling within the range of $6.80 to $7.00 per share. This aligns with current market expectations of $7.06 per share. UBS sees these factors as making Walmart’s stock an attractive investment opportunity.
Data from InvestingPro emphasizes Walmart’s status as a stable entity in the retail sector, with a market capitalization of $455.77 billion. This highlights Walmart’s significant role in the Consumer Staples Distribution & Retail industry. The company’s consistent shareholder returns, including 28 consecutive years of increasing dividends maintained for 51 years, demonstrate its financial health and stable performance.
Walmart’s low Price-to-Earnings (P/E) ratio in relation to its near-term earnings growth, along with a Price/Earnings to Growth (PEG) ratio of 0.33, suggest potential undervaluation based on its growth rate. Despite trading near its 52-week high, analysts predict that Walmart will remain profitable this year, indicating a solid financial foundation.
In summary, a cautiously optimistic outlook is emerging for Walmart. The company’s internal strategies aimed at alternative profit streams, combined with external market conditions, could influence its performance. UBS remains bullish on Walmart’s stock and believes it presents an appealing investment opportunity.
Analyst comment
Positive news. Analyst prediction: Walmart’s stock is expected to rebound in discretionary spending and focus on high-margin revenue streams, potentially leading to earnings within the range of $6.80 to $7.00 per share by 2024. UBS maintains a buy rating and sets a price target of $190.00.
