Walmart (WMT) remains a healthy, effectively managed company with “solid growth” and “strong flow through,” RBC Capital Markets said in a note, raising its Q2 earnings estimate to $0.64 per share from $0.62 and increasing its price target $70 from $62.
“A growing profit contribution from advertising and membership income supports a re-rating,” RBC said, maintaining its outperform rating.
Walmart’s Q1 results had “few holes to poke,” RBC said, noting that management had shared that sales were consistent when normalized for unusual calendar and weather events.
Also important is that customers’ grocery purchases increasingly include lower-priced proprietary Walmart brands, giving the retailer “more leverage in supplier negotiations,” the analysts said.