Analysts Cheer Walmart's Big Quarter

Walmart Inc (NYSE: WMT) wowed Wall Street Tuesday with an impressive holiday-quarter earnings report that included big EPS and revenue beats and 43 percent U.S. e-commerce sales growth. Walmart also reiterated its fiscal 2020 guidance for same-store sales growth of between 2.5 percent and 3 percent and online sales growth of around 35 percent.

Investors got just what they were looking for from Walmart this week, and plenty of analysts were impressed as well. Here’s a look at what several analysts have had to say following Walmart’s big quarter.

Firing On All Cylinders

CFRA analyst Camilla Yanushevsky said the recent acceleration in Walmart’s online sales justifies some earnings multiple expansion for the stock.

"The Walmart U.S. segment (66% of total quarterly sales and 92% of operating income ex. overhead) is firing on all cylinders, fueled by robust e-commerce growth,” Yanushevsky wrote in a note.

Bank of America analyst Robert Ohmes said Walmart has plenty of positive momentum heading into fiscal 2020.

“WMT drove impressive US ticket comp growth of 3.3% in F4Q without any meaningful inflation during the quarter (cost increases were largely offset by price investments),” Ohmes wrote.

Credit Suisse analyst Seth Sigman said Walmart’s largest U.S. sales growth in a decade is a sign that the company’s strategy is working.

“Walmart's Q4 results were strong and provided further evidence that its efforts to enhance the store experience as well investments in omni-channel are driving stronger market share gains,” Sigman wrote.

Disruption Continues

Baird analyst Peter Benedict said Walmart continues to disrupt the retail space with its omnichannel approach.

“With momentum behind CEO Doug McMillon’s transformation still building, underlying profitability trends improving, and the company's competitive position strengthening, we believe the premium valuation afforded to this rare ‘growth staple’ is sustainable,” Benedict wrote.

Tigress Financial analyst Ivan Feinseth recommends Walmart investors take the opportunity to cash out on a high note and buy Target Corporation (NYSE: TGT) and Costco Wholesale Corporation (NASDAQ: COST) instead.

“While Walmart’s recent quarterly results are impressive, it continues to face the ongoing headwinds of the law of large numbers and flat Y/Y earnings growth over the NTM,” Feinseth wrote.

KeyBanc analyst Edward Yruma said Walmart’s investments in store improvements and its e-commerce offerings are driving market share gains.

“Importantly, stronger efficiency within U.S. stores point to the emergence of a financial model that can balance sales and earnings growth,” Yruma wrote.

Ratings And Price Targets

• CFRA has a Buy rating and $115 target.
• Bank of America has a Buy rating and $120 target.
• Credit Suisse has a Neutral rating and $103 target.
• Baird has an Outperform rating and $110 target.
• KeyBanc has an Overweight rating and $120 target.

After a big move higher Tuesday, Walmart shares traded at $100.25 at time of publication.

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Photo courtesy of Walmart.

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