Analyst unveils new Walmart stock price target ahead of earnings

Here's what could happen to Walmart and Target's shares next.

Feb 7, 2024 - 08:30

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Analyst unveils new Walmart stock price target ahead of earnings

Sam Walton once said that "I got into retailing because I wanted a real job" — and what a job he did.

In 1962, Walton opened a store in Rogers, Ark., and the business kept growing until Walmart (WMT) - Get Free Report became the largest retailer in the world.

The company rolled out the first Walmart superstores (named Sam's Club) and its first phase-in of Walmart Supercenters by 1983 and 1988, respectively.

Walmart doubled its sales in 1995, three years after Walton's death.

Management had taken a risk in doing so, electing to borrow the funds needed to open more and more superstores.

Debt piled up but management's bet paid off, as Walmart earned the cash it needed to repay its financing loans.

Today, Walmart operates roughly 10,500 stores and clubs in 19 countries and e-commerce websites.

Walmart stock analysts update their outlook on the retail giant ahead of earnings on Feb. 20.
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Walmart CFO: 'Our strategy is winning'

The Bentonville, Ark., company employs 2.1 million people — roughly the population of Slovenia — with nearly 1.6 million in the U.S. alone. It has a market capitalization of nearly $456 billion.

"We like our competitive position," Chief Financial Officer John David Rainey said during the company's third-quarter-earnings call on Nov. 16. "Our financial results clearly demonstrate that our omnichannel strategy is winning."

"We're growing our share across categories, deepening customer engagement across channels, while investing in areas to widen our competitive advantage," Rainey added.

The company decided early this month to split its shares, giving shareholders who own Walmart stock as of Feb. 22 three shares for every one share they own.

Walmart is scheduled to report fiscal-fourth-quarter earnings on Feb. 20. Analysts surveyed by FactSet are expecting the company to earn $1.63 per share on revenue of $170 billion.

A year earlier the company posted Q4 earnings of $1.71 a share on sales of $164 billion.

Jefferies raised its price target on Walmart to $195 from $190, while affirming a buy rating on the shares ahead of the earnings report. Walmart shares are currently trading near $170.

Jefferies doesn't expect many companies reporting earnings surprises based on its analysis. But the investment firm said it does expect Walmart to post a modest sales beat and guide fiscal 2025 conservatively given the possibility inflation continues slowing.

Walmart isn't the only big retailer Jefferies likes

Walmart has plenty of competition in the retail sector, including Target (TGT) - Get Free Report, which is scheduled to report fiscal-fourth-quarter earnings on March 5 and which Jefferies also covers.

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Target, founded in 1902 by the businessman George Dayton, was originally named Goodfellow Dry Goods. The first Target discount store opened in 1962 in Roseville, Minn. Nowadays, it has 2,000 locations and a market cap of $66.2 billion.

Target is smaller than Walmart, but it has worked hard to offer merchandise different from that of its rivals, usually through its owned-and-operated private-label brands.

That's been good for its bottom line.

Target is expected to post earnings of $2.40 a share on revenue of $31.8 billion, according to FactSet. A year earlier Target reported earnings of $1.89 a share on revenue of $31.4 billion.

“We're playing the long game, investing in our stores, our team, our digital capabilities, and our assortment to provide the newness, value, and convenience our guests want for this holiday season and beyond,” Brian Cornell, chairman and CEO, told analysts during Target's Nov. 15 earnings call.

In addition to Walmart, Jefferies raised its Target share price forecast to $170 from $150 while affirming a buy rating on the shares. Target stock traded at about $144 on Feb. 6.

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