Walmart Shares Climb on Q1 Earnings Beat and Raised Outlook; Target Price $180 in Best Case

Walmart shares rose as much as 4% on Tuesday after the Bentonville, Arkansas-based retailer reported better-than-expected earnings and revenue in the first quarter and lifted its full-year guidance.

The multinational retail corporation that operates a chain of hypermarkets said its operating income jumped over 30% to $6.91 billion and adjusted earnings rose 43% to $1.69 per share, beating the Wall Street consensus estimates of $1.21 per share.

The world’s largest retailer said its total revenue rose about 3% to $138.3 billion, above the analysts’ expectations of $131.97 billion.

The retail giant forecasts fiscal 2022 earnings to increase by high single digits, an upgrade from the previous forecast for a slight decline in profit.

“We anticipate continued pent-up demand throughout 2021,” said Doug McMillon, President and CEO at Walmart.

Following the upbeat results, Walmart stock rose as much as 4.09% to $144.58 on Tuesday.

Analyst Comments

“Solid Q1 beat against mixed/negative sentiment bodes well for the stock. Higher F’22 outlook mostly on Q1 beat keeps expectations in check. Good cost management implied for the remainder of F‘22,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“These results and guidance raise are a positive for the stock in our view. The full-year EPS outlook was raised by approximately 6-10%, which sets the stock up to grind back to its 2020 highs assuming the multiple holds.”

Walmart Stock Price Forecast

Nineteen analysts who offered stock ratings for Walmart in the last three months forecast the average price in 12 months of $165.19 with a high forecast of $180.00 and a low forecast of $141.00.

The average price target represents a 16.40% increase from the last price of $141.91. Of those 19 analysts, 16 rated “Buy”, three rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley raised the base target price to $160 from $154 with a high of $250 under a bull scenario and $100 under the worst-case scenario. The firm gave an “Overweight” rating on the multinational retail corporation’s stock.

Several other analysts have also updated their stock outlook on Tuesday. Raymond James raised the stock price forecast to $165 from $155. JP Morgan upped the target price to $157 from $148. Telsey Advisory Group lifted the price objective to $170 from $162.

“Despite increasingly difficult comparisons, wide-moat Walmart saw strong fiscal 2022 first-quarter performance, with 3% revenue expansion spurred by growth in all channels and rising general merchandise sales. This should lead us to lift our near-term targets and our $124 fair value estimate by a mid-single-digit percentage,” noted Zain Akbari, equity analyst at Morningstar.

“We attribute the results to transitory pandemic-related volatility and still expect low-single-digit sales growth and 4%-5% adjusted operating margins long-term. We suggest investors await a more attractive entry point, considering near-term volatility and intensifying competition.”

Check out FX Empire’s earnings calendar