Walmart (NYSE:WMT) investors found themselves facing the tariff bogeyman last week, with the bargain retail giant emerging as the latest victim after reporting Q2 2025 results that drew less than stellar reviews.
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Though Walmart grew sales revenues to $177.4 billion – beating expectations by $1.37 billion – its EPS of $0.68 missed by -$0.06. This was the first earnings miss for Walmart in over three years, and WMT’s share price slid downwards by 6% in the days that followed.
The company management cited the tariffs as the reason for the rare earnings miss, as Walmart is taking steps to mitigate the impact on customers by absorbing a good portion of the rising costs.
Morgan Stanley analyst Simeon Gutman applauds this strategy, arguing that it is the best way to ensure customer loyalty and secure growth over the long haul.
“WMT is taking the right approach to long-term value creation by prioritizing market share gains over short-term profitability, as U.S. retailers across the board incorporate tariffs into their cost structures,” explains the analyst.
By demonstrating its commitment to consumers at this “pivotal time,” Gutman posits that Walmart is sowing the seeds for growth in operating income in the years ahead. Looking forward, the analyst forecasts “meaningful” growth in operating incoming in the second half of 2026 and during 2027.
In fact, the analyst is even increasing his profit estimates – and now projects EPS of $2.88 in 2027 and $3.08 in 2028, respectively, up from his previous estimates of $2.86 in 2027 and $3.06 in 2028.
Though he believes that WMT will be rangebound for now, that doesn’t mean that good things aren’t cooking under the surface. For instance, Gutman points to Walmart’s eCommerce growth (up 26% sequentially last quarter), advertising sales (which enjoyed 31% growth), and membership income (which Gutman estimates surged by more than 25%). These growth drivers offer additional support for the analyst’s bullish take.
“Our investment thesis on WMT is unchanged as the underlying drivers of profitability remain intact,” emphasizes Gutman, who is assigning an Overweight (i.e. Buy) rating for WMT. Gutman’s price target of $115 has an upside approaching 20%. (To watch Simeon Gutman’s track record, click here)
That’s basically where Wall Street finds itself as well. With 29 Buy ratings and not a single Hold or Sell, WMT cruises to a Strong Buy consensus rating. Its 12-month average price target of $113.89 has an upside of 18.5%. (See WMT stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.