UBS raised its price objective on Walmart Inc. to $147 from $135 while keeping a Buy rating, signaling continued confidence in the retailer's strategic and operational progress. The new target implies additional upside for the $995 billion company, which has returned about 30% to shareholders over the past year.
In explaining the revision, UBS pointed to several elements of Walmart's fourth-quarter results that stood out. U.S. comparable sales momentum was maintained, underpinned by ecommerce growth in the high-20% range, according to the firm. That digital expansion has helped support broader sales performance while altering the mix of revenue toward higher-margin digital channels.
UBS also highlighted the growing contribution of non-traditional profit streams. Advertising and membership together represented more than one-third of Walmart's EBIT in the quarter, a sign that these categories are becoming a meaningful component of overall profitability.
Operational improvements were another focus. Walmart generated more than 10 basis points of SG&A leverage for the first time in 11 quarters as automation, digital shelf tags, and labor efficiency measures began to produce results. Those initiatives contributed to Walmart reporting EBIT that exceeded consensus estimates by 2% for the quarter.
While UBS moved its price target higher, InvestingPro analysis noted that the stock appears overvalued relative to its Fair Value. At the same time, the platform reported that 10 analysts have recently revised earnings estimates upward, underscoring a shift in expectations among sell-side firms. Investors can consult detailed valuation metrics and the Pro Research Report for deeper diagnostics of Walmart's financial position and valuation.
Other investment firms have adjusted their views in the wake of Walmart's fourth-quarter performance and strategic developments:
- Truist Securities raised its price target to $139, citing a 4.6% rise in U.S. comparable sales that beat its prior estimate.
- DA Davidson lifted its target to $150, pointing to the effects of automation and AI on margin improvement.
- TD Cowen increased its target to $145, emphasizing Walmart's position in artificial intelligence and the potential for conversational commerce to change retail interactions.
- Telsey moved its target to $140, attributing market share gains to a value-priced product mix and technology investments.
- KeyBanc reaffirmed an Overweight rating with a $145 price target, noting continued market share growth and investments in the supply chain.
These updates from multiple firms reflect a consensus among analysts that Walmart's recent results and investments have strengthened its competitive position and contributed to improved operating performance. Firms cited a mix of top-line drivers, profit mix shifts toward advertising and membership, and efficiency gains from technology and labor programs.
Summary of the quarter's financial and operational takeaways is reflected in the analyst actions: sustained ecommerce growth, an expanding role for advertising and membership in EBIT, modest SG&A leverage driven by automation and labor efficiency, and an EBIT result that modestly outperformed consensus by 2%.