HSBC has trimmed its recommendation on Walmart, moving the stock from "buy" to "hold" after the retailer issued a modest full-year outlook that the bank's analysts describe as "surprisingly weak." The downgrade follows Walmart's recent quarterly report, where results were judged solid but the forward guidance viewed as conservative.
Analysts Joe Thomas and Guilherme Domingues of HSBC said in a note that although Walmart's reported results were "solid," the guidance the company provided was "weak." They also emphasized that Walmart executives, during the post-earnings call, underscored the "conservatism" embedded in management's projection for the year ahead.
"It is hard to see a marked deterioration in the trading environment: Management says that it hasn’t seen any change in consumer behavior or [key performance indicators]," the HSBC analysts wrote.
Despite that view, HSBC warned that its own forecasts may show only limited "near-term momentum" for Walmart. The bank pointed to the company's cautious tone in setting expectations, suggesting the upside in the near term could be constrained.
Walmart's guidance for fiscal 2027 adjusted earnings per share came in at $2.75 to $2.85, below the Bloomberg consensus of $2.97. For the first quarter, the company guided adjusted earnings of $0.63 to $0.65 per share, under Wall Street's expectation of $0.69.
In a presentation accompanying results, Walmart warned that "results may be materially affected by many factors, such as fluctuations in foreign currency exchange rates, changes in global economic and geopolitical conditions, tariff and trade policies, customer demand and spending, inflation, interest rates, world events, and the various other factors." The company thus framed its outlook as subject to substantial uncertainty.
For the fourth quarter, Walmart reported adjusted earnings of $0.74 per share on revenue of $190.66 billion. Analysts had expected $0.73 a share and revenue of $190.58 billion.
Shares reacted negatively to the guidance and HSBC's downgrade, slipping on Thursday and erasing the market capitalization gains that had briefly pushed Walmart above the $1 trillion threshold. Nonetheless, the stock has gained more than 10% year-to-date.
Note: This article presents the company's reported figures and the views attributed to HSBC and Walmart executives as provided in the company's earnings materials and analyst commentary.