Walmart stock: UBS raises target ahead of earnings

UBS raised its price target for Walmart from 130 to 149 US dollars, arguing that the retailer's earnings potential extends beyond headline sales. The assessment was reported by Yahoo Finance on Monday, November 9, ahead of Walmart's fiscal third-quarter results.

Walmart stock traded at 112.95 euros on Lang & Schwarz at 14:01 CET on Tuesday, November 10, 1.48 percent above the Xetra close of Monday, November 9. The move gives investors a near-term market reference while attention remains on the upcoming earnings release.

Growth beyond comparable sales

UBS expects Walmart's third-quarter results to show continued market-share gains, resilient profitability and increasing contributions from higher-margin businesses. The broker sees US comparable-sales growth meeting or modestly exceeding expectations of 2 to 3 percent, supported by customer traffic and expanding e-commerce activity.

The analysis argues that recent price investments could strengthen Walmart's value proposition and attract additional customers. Lower prices may initially weigh on reported revenue through deflation, but higher volumes and customer retention could support the broader earnings case. E-commerce and alternative revenue streams are central to that view because they can generate profit beyond the traditional comparable-sales measure.

Margin pressure remains the risk

UBS also highlighted pressure on Walmart's domestic gross margin. The bank estimates 650 million US dollars of additional freight expense for the quarter and forecasts a 16-basis-point year-over-year change in gross margin as a share of net sales. Consensus assumes flat margins, while UBS sees potential for 30 to 50 basis points of underlying US gross-margin expansion under typical conditions.

The broker expects analysts could lift earnings estimates by 0.03 to 0.05 US dollars after the results. That could give Walmart room to raise its existing fiscal-year earnings-per-share guidance of 2.80 to 2.87 US dollars. UBS nevertheless cautioned that the results may not move the shares significantly after their recent performance and amid an elevated valuation.

Next catalyst is November earnings

Walmart is scheduled to report its fiscal third-quarter results on Thursday, November 19. Investors will focus on comparable sales, e-commerce momentum, gross-margin development and whether management changes its fiscal-year outlook. The balance between price investment, freight costs and higher-margin businesses will shape the earnings debate.

The broader US market backdrop can be followed through the S&P 500 market coverage.

More news and analyses on Walmart stock are available on the company's topic page.