Walmart Stock Fell as Oppenheimer Predicted Rocky Results and an Entry Point

Walmart Stock

Walmart Stock (NYSE:WMT)

Oppenheimer is preparing to take a position on Walmart (NYSE:WMT) in advance of the retail giant’s earnings report for the fourth quarter, which is scheduled to be released on February 21.

Analyst Rupesj Parikh and his colleagues anticipate Walmart (WMT) will post another solid top-line performance, with the food division more than balancing challenges in key discretionary categories and margin concerns.

The company anticipates that Walmart will post a comparable sales gain of 6% in the United States. Still, it also anticipates that margin headwinds will slightly constrain EPS flow-through associated with the improved comp. Importantly, it is believed that conservative advice will result in some share price volatility and a possible entry opportunity for new investors.

“We anticipate a below-algorithm guidance in light of the macroeconomic unpredictability and company-specific headwinds, such as the recent rise in the minimum wage and an expected LIFO charge of fewer than one billion dollars. If there was a flaw in the print, we would be in the perfect position to exploit it.”

Oppenheimer has set a 12- to an 18-month price target of $160 on Walmart stock with an Outperform rating based on a 24x P/E multiple applied to the estimated earnings per share (EPS) for FY24 of $6.80. In addition, the PT is to an EV/EBITDA multiple of around 12 times.

The company has a positive outlook on the long-term potential of Walmart, and they believe that Walmart stock is still in a good position to outperform the market. This outlook is supported by continued grocery share gains, an increasing contribution from alternative revenue streams, ongoing benefits from WMT’s investments in e-commerce, and an improved international footprint.

Walmart stock fell to $140.2 in midday trading on Monday, a decrease of 0.95% from its previous price. Year-to-date, WMT shares are down 1.33%.

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