Walmart (WMT) Stock: Why Analysts Call It “The Complete Package” For Investors

Walmart (WMT) Stock: Why Analysts Call It “The Complete Package” For Investors

TLDR

• Mizuho initiated coverage on Walmart with Outperform rating and $105 price target
• Walmart reaffirmed Q1 sales guidance (3-4% growth) and full-year outlook despite economic uncertainty
• The company has transformed from legacy retailer to e-commerce player with strategic investments
• Recent e-commerce growth of 16% and advertising revenue increase of 28% show strong momentum
• Walmart increased its dividend by 13% in February, its largest hike in over a decade

Walmart stock is displaying resilience despite current economic challenges. Mizuho analysts started coverage on Friday with an Outperform rating and a $105 price target, suggesting over 15% upside from current levels.

The retail giant reaffirmed its first-quarter sales growth forecast of 3-4% and maintained its full-year outlook for both sales and profits. This comes even as the company rescinded its specific Q1 profitability guidance.

Walmart has successfully transformed itself from a traditional brick-and-mortar operation into a major e-commerce competitor. The company has outspent peers on investments since fiscal 2016, according to Mizuho analysts.

These investments appear to be paying off. Automation efforts are showing “early benefits” and the online business is approaching profitability.

Strong Digital Performance

Walmart’s digital strategy has been particularly effective. E-commerce sales rose 16% year-over-year in the last quarter of fiscal 2025.

The company has also developed new revenue streams. Its global advertising business grew 28% during the same period.

These alternate revenue channels are helping Walmart maintain growth even when facing potential economic challenges.

The company’s transformation hasn’t gone unnoticed by shareholders. In February, Walmart announced a 13% dividend increase – its largest in over a decade.

Navigating Trade Tensions

Walmart has experience handling complex tariff situations. Despite sourcing about one-third of its products from outside the U.S. (primarily China and Mexico), the company has strategies to maintain its low-price positioning.

According to analysts, these strategies include pushing back on vendors and redesigning products to exclude certain features affected by tariffs.

Walmart CFO John Rainey expressed confidence in the company’s ability to navigate uncertain periods. “History tells us that when we lean into these periods of uncertainty, Walmart emerges on the other side with greater share and a stronger business,” he stated in a recent press release.

The company’s approach to maintaining sales targets while remaining flexible on short-term profitability demonstrates strategic long-term thinking.

This flexibility was highlighted when Walmart widened its range of expectations for Q1 operating income. The change reflects “less favorable category mix, higher casualty claims expense and the desire to maintain flexibility to invest in price as tariffs are implemented.”

Despite these short-term adjustments, Walmart maintained its full-year sales growth outlook of 3-4% and its adjusted operating income growth projection of 3.5-5.5%.

Fiscal 2025 was strong for the retailer. Revenue rose 5.6% year-over-year in constant currency to $681 billion, with adjusted operating income climbing 8.6% (or 9.7% when adjusted for foreign exchange).

Mizuho’s analysis includes multiple scenarios. Their bull case suggests the stock could reach $125 on accelerating comparable sales and growth in alternate revenue streams.

Their bear case puts the stock at $75 if consumer spending slows significantly or a recession materializes.

However, the analysts believe Walmart offers “defensive posturing in parallel with a structurally higher margin profile,” even if a mild recession occurs.

Shares were up 0.4% to $91 in premarket trading on Friday, outperforming futures for both the S&P 500 and Nasdaq Composite.

The stock closed at $90.68 on Thursday, representing a 1.21% gain for the day.

For investors concerned about economic uncertainty, Walmart’s confidence in maintaining sales guidance despite challenges could signal that consumer spending remains relatively stable.

As one of the world’s largest retailers, Walmart’s performance serves as an important indicator of consumer health and broader economic stability.

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