Walmart Stock Slips Even as BofA Lifts Target to $139

What happened

BofA Securities raised its Walmart price target to $139 from $126 and kept its Buy rating ahead of the retailer’s third-quarter results. BofA forecasts earnings per share of $0.63 and Walmart U.S. comparable sales growth of 2.8%, excluding fuel.

Confirmed

Global impact / market context

BofA’s higher target reflects a higher valuation multiple, or the share price assigned to each dollar of earnings, rather than only stronger forecasts. The firm says faster comparable sales growth and rising marketplace and advertising revenue are needed to support stronger profit growth next year.

Analyst inference

The article reports that BofA expects Walmart to move full-year sales and earnings guidance to the upper end of its previous range, while BMO and Mizuho have also raised their targets. These are analyst expectations, not reported results or company guidance changes.

Confirmed

What to watch

1. Walmart reports third-quarter results on November 19; compare reported earnings per share and U.S. comparable sales, excluding fuel, with BofA’s forecasts of $0.63 and 2.8%. Confirmed
2. Watch whether Walmart raises full-year sales and earnings guidance toward the upper end of its previous range, as BofA expects, and whether management supports that outlook with results. Proposed
3. Look for evidence that U.S. comparable sales are accelerating beyond health and wellness and that marketplace and advertising revenue can lift next year’s earnings growth. Analyst inference

Evidence

• gurufocus.com