Walmart (NYSE: WMT) continues to solidify its position as a defensive investment and a growth leader in the retail sector, with analysts revising their price targets upward following the company’s impressive third-quarter earnings report.
The retail giant’s stock has been on an upward trajectory, rising 70% year-to-date (YTD) to a press-time price of $90.04. This momentum is driven by a strong Q3 performance, which outpaced Wall Street expectations and set the stage for further gains.
Key growth drivers: E-commerce, memberships, and advertising
Walmart’s e-commerce segment remains a critical growth driver. Strategic investments in automation have enabled the company to lower delivery costs while improving service quality.
Picks for you
More than 50% of its fulfillment center volume is now automated, and over 30% of online orders include convenience fees for expedited delivery, demonstrating customers’ willingness to pay for Walmart’s reliable logistics. These initiatives have further cemented Walmart’s leadership in the digital retail space.
Membership programs such as Walmart+ and Sam’s Club have also shown double-digit growth in the U.S., while international markets like China reported over 30% increases in membership income.
Additionally, Walmart’s advertising business expanded by 28% in Q3, with Walmart Connect driving growth in the U.S. and Flipkart boosting international sales. These efforts have strengthened Walmart’s global footprint and diversified its revenue streams.
Looking ahead, Walmart is well-positioned for the holiday shopping season, supported by optimized inventory levels and reduced markdowns. Technology-driven innovations, such as Scan & Go, further enhance its appeal to price-conscious shoppers.
With the National Retail Federation projecting holiday sales growth of 2.5% to 3.5% over 2023, Walmart is poised to capitalize on consumer trends and sustain its momentum, making it an attractive stock to own this season.
Stellar Q3 performance and analyst reactions
Walmart reported adjusted earnings of $0.58 per share for Q3, exceeding analysts’ estimates of $0.53. Total revenue climbed 5.5% year-over-year to $169.6 billion, surpassing projections of $167.7 billion.
The company’s strong performance reflects significant growth across its core segments, driven by robust global e-commerce sales, which surged 27%, and a 28% rise in advertising revenue. Additionally, Walmart’s membership income rose by 22%, showcasing its ability to grow profits faster than sales through its evolving business strategy.
Analysts have taken note of Walmart’s impressive performance and growth prospects, prompting upward revisions in their price targets. Jefferies analyst Corey Tarlowe raised his price target to $105 from $100, citing the company’s robust same-store sales growth and its ability to deliver improved value to customers.
Barclays analyst Seth Sigman raised Walmart’s price target to $90 from $78, maintaining an Overweight rating on the stock. The firm adjusted its fiscal 2025 earnings estimates to account for Walmart’s stronger-than-expected Q3 performance and updated Q4 projections, reflecting increased sales momentum, continued strategic investments, and worse currency effects.
Similarly, UBS raised its price target to $100 from $92, highlighting Walmart’s ongoing transformation into the next phase of its business evolution.
UBS compared this transformation to its historic shift from big-box stores to supercenters, viewing Walmart as a core, long-term investment opportunity with significant growth potential.
With strong Q3 results, strategic growth initiatives, and a promising holiday outlook, Walmart remains a compelling choice for investors seeking a blend of stability and growth.
Featured image via Shutterstock
