Consumer Champion Walmart is Now a “Buying Opportunity” after Q1 Selloff, Claim Analysts

Grocery giant Walmart (WMT) is now a “buying opportunity”, according to analysts, after its shares plummeted yesterday following mixed Q1 results.

Q2 Guidance Shock

Walmart’s shares dropped over 7% yesterday after its second-quarter guidance fell short of the Street’s expectations, with elevated gas prices impacting consumer budgets. It claimed that consumers are beginning to pullback on their spending.

Its shares continued falling in early trading today.

However, JPMorgan (JPM) added WMT to its Analyst Focus List as a growth idea while keeping an Overweight rating on the shares with a $137 price target. The post-earnings share selloff provides a buying opportunity, analyst Christopher Horvers told investors in a research note. JPMorgan believes Walmart’s share gains and alternate profit pool “flywheel” has accelerated. The firm expects the shares to “recover and get back to its grind higher” as the market prices in Walmart’s future earnings power over time.

AJ Bell’s head of financial analysis Dani Hewson, also sees upside for Walmart despite those consumer headwinds. “The fuel shock is undermining consumer spending power in the US, with bellwether retailer Walmart seeing shares fall after it maintained its somewhat conservative sales and profit targets for the year,” she said. “Under-promising and over-delivering is always a smart move, but Walmart had been trading near multi-year highs and this update failed to reassure investors.”

Consumers Look for Value

She said that margins are expected to remain under pressure from shifting tariffs and increased fuel costs which make transporting goods to those big boxes more expensive. “But a consumer facing their own rising fuel costs will continue to seek out the kind of value that Walmart has become synonymous with after a series of price cuts beginning last year,” she said.“Striking the right balance is tough but Walmart’s size is a major advantage, especially with inflation on goods like food expected to keep rising.”

BofA analyst Christopher Nardone lowered his price target on the stock to $144 from $150. He lowered the multiple after earnings due to the more challenged consumer backdrop, but thinks share gains will accelerate with a price-conscious consumer, which “should drive a return to a beat/raise cycle assuming the freight environment doesn’t worsen.” 

Is WMT a Good Stock to Buy Now?

On TipRanks, WMT has a Strong Buy consensus based on 26 Buy ratings. Its highest price target is $154. WMT stock’s consensus price target is $142.04, implying an 18.86% upside.