RBC Capital on Wednesday increased its price objective for Walmart (NASDAQ:WMT) to $140.00 from $126.00 and kept an Outperform rating on the shares. The new target sits above the stock's latest trade at $126.70, with the company currently trading at a price-to-earnings ratio of 44.46, according to InvestingPro data.
Under RBC’s revised model, the $140 target equates to a valuation of about 42 times the investment bank’s projected adjusted earnings per share for 2027, which it pegs at $3.33. That multiple is higher than the prior implied multiple of roughly 38 times, and the $3.33 EPS forecast is marginally above the consensus estimate of $3.32. RBC noted that the expanded multiple is consistent with Walmart’s present PEG ratio of 2.43, suggesting the stock is trading at a premium relative to its near-term earnings growth rate.
Valuation and analyst caution
While RBC pointed to continued momentum at Walmart, the firm also cautioned that market expectations appear elevated ahead of the retailer’s fourth-quarter earnings report, which is scheduled for February 19. In its modeling for the quarter, RBC expects currency-neutral net sales growth of 5.6%, Walmart U.S. comparable sales growth of 4.2%, and adjusted earnings per share of $0.72.
RBC highlighted that Walmart has produced revenue growth of 4.34% over the last twelve months, and analysts continue to expect the company to remain profitable through the year. The broker also indicated that Costco’s valuation, at about 44 times earnings, likely represents an effective upper bound for Walmart’s multiple.
Strategic positioning and growth drivers
The bank underscored Walmart’s positioning to capture market share and to expand margins through the growth of alternative revenue streams, notably advertising. RBC’s view of the retailer’s competitive leverage is reflected in its willingness to assign a premium multiple to projected long-term earnings.
InvestingPro classifies Walmart as a prominent company within the Consumer Staples Distribution & Retail industry and assigns the business a "GOOD" overall financial health score. The firm operates with a moderate level of debt and has sustained dividend payments for 53 consecutive years.
Market performance and broader analyst activity
Walmart shares have risen 14% year-to-date, significantly outperforming the S&P 500’s 2% gain, and have outpaced the broader market by roughly 12% since the company reported third-quarter results. RBC’s move follows similar adjustments by other brokerages: BTIG and Oppenheimer also raised their price targets on Walmart to $140. BTIG retained a Buy rating and forecasts EPS of $0.72 with U.S. comparable sales growth of 4.5%. Oppenheimer maintained an Outperform rating, citing a robust holiday season and potential weather-related benefits in its rationale.
Jefferies reiterated a Buy rating with a $132 price target, noting Walmart’s advantageous position after PepsiCo elected to reduce snack prices, which Jefferies views as a favorable development for Walmart’s retail mix.
Operational developments and sector moves
On the operational front, Walmart recently opened a new Supercenter in Jacksonville, Florida, creating 400 jobs. The store opening forms part of Walmart’s broader plan to build or convert more than 150 locations in the coming years.
In related sector news, Barclays held an Equalweight rating on Kroger and reacted positively to the appointment of Greg Foran as CEO, citing his experience and the company’s growth trajectory. These various updates illustrate ongoing strategic adjustments and repositioning by major retailers in the current market environment.
Investor resources
For investors seeking additional detail, InvestingPro offers a Pro Research Report on Walmart among more than 1,400 reports available on the platform, providing deeper analysis on key financial and operational metrics.
Overall, RBC’s target increase and the cluster of raised price targets from other firms reflect bullish analyst sentiment around Walmart’s near-term sales and alternative revenue opportunities, balanced by caution about heightened expectations ahead of the upcoming quarterly report.