Walmart is “on the precipice of a major inflection”, this analyst says

Following the company’s third quarter results, Roth MKM analyst Nick Anderson remains bullish on Walmart (Walmart Stock Quote, Chart, News, Analysts, Financials NYSE:WMT).

On November 19, WMT reported its Q3, 2024 results. The company posted Adjusted EPS of $0.58 on revenue of $169.6-billion, a topline that was up 5.5%, year-over-year. The company noted that eCommerce was up 27%, globally.

Anderson says Walmart’s business is changing for the better.

“Traditionally, Walmart competed primarily on value, but increased e-commerce adoption and investment now allows Walmart to compete on the equally important, and previously unavailable dimension of convenience. This incremental proposition (together the dynamic duo of grocery) is driving new households, new demographics, and new opportunities,” he wrote. “Walmart’s margins are expanding, even as it has dramatically increased capital spend (especially relative to competitors). 3Q showcases the increased market share opportunities, with margin expansion.

In a research update to clients November 19, the analyst maintained his “Buy” rating and price target of $81.00 on Walmart.

The analyst thinks WMT will post EPS of $2.45 on revenue of $678.4-billion in fiscal 2025. He expects those numbers will improve to EPS of $2.83 on a topline of $704.8-billion in fiscal 2025.

“Walmart is on the precipice of a major inflection,” Anderson argued. “Its automatization opportunities, data capabilities, and consumer proposition are a rare combination that supports market share gains AND increased profitability. Usually share is expensive, but in this case, investments to re-accelerate growth have already been made. The combination of 1) improved WMT stores; 2) leading digital presence (marketplace, delivery, logistics, subscription, etc.); and 3) a rapidly growing ad business is dramatically separating WMT from traditional brick & mortar competitors. Its model is inflecting toward a more profitable, less volatile, wider-reaching ecosystem. The ad opportunity, combined with absolute costs savings via automation, puts WMT in a unique position to attack market share.”