Walmart analysts cut price targets after Q3 guidance misses estimates

Walmart reported Q2 adjusted EPS of $0.81, beating the $0.74 consensus, but guided Q3 below estimates, prompting analysts to cut price targets.

"The market was questioning the quality and durability of those earnings," Christopher Nardone, analyst at Bank of America, said. Nardone kept a Buy rating and a $144 price forecast.

Walmart guided Q3 adjusted EPS of $0.62 to $0.64, below the $0.68 consensus, and sales of $183.1 billion to $184.5 billion, versus the $188.3 billion estimate. US comparable sales excluding fuel grew 2.6 percent, the slowest in more than six years, missing the 3.8 percent expected. E-commerce grew 23 percent globally, advertising rose 38 percent, and membership fees increased 17 percent.

The guidance miss pressured shares, which fell more than 7 percent in pre-market trading. Walmart raised its full-year EPS forecast to $2.80 to $2.87, but the high end remained below the roughly $2.90 consensus. The second-half outlook implies nearly flat year-over-year earnings growth.

Analyst Actions

Recent analyst moves on Walmart include RBC Capital Markets at Outperform with a $137 target, Bernstein at Outperform with $142 (cut from $145), UBS at Buy with $141 (cut from $147), and BNP Paribas at Outperform with $146 (cut from $147). BTIG holds a Buy with $145, while Tigress Financial raised its target to $155 from $150.

Walmart's Q2 operating income rose 28.8 percent to $9.4 billion, helped by nearly $3 billion in tariff-related refunds tied to duties struck down by the US Supreme Court. CFO John David Rainey said the company would use the refunds to "prioritize price investment" through the rest of the year, a strategy already visible in price cuts on beef, chips, and soda introduced in early July.

The retailer continued to gain share among households earning more than $100,000 annually, while lower-income customers stayed cautious as food and fuel inflation consumed more of their budgets. Sam's Club delivered about $25.7 billion in quarterly revenue, with operating income up more than 40 percent.

The guidance miss signals management expects consumer demand to stay subdued into the holiday quarter. Investors will watch the Q3 earnings call for updated comparable-sales trends and whether price investments translate into market-share gains.

This article is for informational purposes only and does not constitute investment advice.