Bernstein reiterated an Outperform rating on Walmart and kept a $145 price target in a client note published Tuesday, arguing that fears about the need for stepped-up price investment are exaggerated.
Analyst Zhihan Ma told investors that Walmart "remains a price leader and price investment is not new," and that continued investments in price should help the company gain market share by widening price gaps with competitors.
The note directly addressed concerns about margin pressure from those price actions. Bernstein pointed out that Walmart is leveraging tariff refunds to fund price cuts and to help offset freight inflation, reducing the immediate profit impact of discounting.
Looking beyond near-term pricing moves, Bernstein framed the longer-term debate around Walmart's ability to improve profitability through omni-channel execution. The firm estimated Walmart's U.S. core e-commerce business will have a fiscal 2026 EBIT margin of -6% on a fully loaded, unsubsidized basis, but said there is "a path to profitability on an unsubsidized basis by FY2030." The analysts identified automated fulfillment and denser delivery routes as key operational levers to drive that improvement.
Bernstein also projected expansion in Walmart's U.S. retail media business. The firm expects that business to grow from roughly 4% of gross merchandise value today to about 5%, with revenue increasing from around $4 billion to $11 billion. That expansion is expected to contribute approximately 75 basis points to Walmart's U.S. EBIT margin.
When combined with the anticipated e-commerce margin improvement, Bernstein sees a route to roughly a 7% EBIT margin for Walmart's U.S. segment. The firm quantified that trajectory as implying about $1.25 of upside to EPS over the next four years.
Bernstein concluded that the recent pullback in Walmart's stock price has created "a more attractive entry point" for investors.
Contextual note: The observations above reflect Bernstein's analysis as presented in its client note. The firm cited specific margin and revenue projections for Walmart's U.S. e-commerce and retail media businesses and described operational initiatives expected to drive improvements.