MW 'Near-term buying opportunity' for Walmart as stock rebounds, analyst says

By Steve Gelsi

Retailing giant's stock is up fractionally in premarket trading after 6.5% drop in the previous session

Walmart Inc.'s stock was fractionally higher in premarket trades on Friday signaling a potential rebound after a brutal selloff in the previous session, as JPMorgan Chase analysts said the retailing giant's shares present a buying opportunity at their current levels.

JPMorgan's Christopher Horvers reiterated an overweight rating on Walmart $(WMT)$ and stuck to his target price of $112 a share.

Walmart's stock was up 0.2% in recent trades.

On Thursday, the stock fell 6.5% to close at $97.21 a share. It was the worst performer in the Dow Jones Industrial Average DJIA after it warned that its quarterly earnings will decline for the first time in three years.

Walmart actually signaled a stronger consumer environment, not a weaker one, and that the reaction to its outlook was "worse than reality," JPMorgan analyst Horvers said.

Walmart management has voiced more confidence in its profit projections, but the company's near-term pace of margin expansion may be slower than previously expected, he said.

But, by investing in its business, Walmart will still achieve high 6% U.S. segment operating margin and 6% internationally in the next three years, Horvers said.

"We believe management is making these investment decisions from a position of strength and, ultimately, the profitability throttle is in their hands," Horvers said.

Walmart's lower-than-expected profit outlook stemmed mostly from pulling forward expenses associated with the integration of smart-TV brand Vizio, acquired a year ago, and February will have one fewer day in it this year than last, he said.

"[Walmart] is taking its typically conservative [tack] starting out the year," he said, noting that the negative slant ties mostly back to last year's being a leap year and the Vizio-linked costs.

JPMorgan's comment on Walmart came as part of a series of positive remarks from analysts despite the selloff on Thursday.

-Steve Gelsi

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February 21, 2025 09:31 ET (14:31 GMT)

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