Walmart Stock (WMT) Widening Gap on Rivals Despite Holiday Price Hikes Ahead
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Market Share
According to a note from analysts at Jefferies, even though Walmart has already raised prices on a range of goods given the uncertainty around President Trump's tariffs, it still expects to gain market share from its peers.
Following a recent meeting with Walmart's head of investor relations, Steph Wissink, Jefferies said in a note that 'prices increased as the tariffs were implemented in April' for perishables and other items sourced from Central America.
The firm noted that in June, prices also began to rise on 'infrequently purchased general merchandise items that were previously trending deflationary.'
Such macro risks are key for consumer-facing stocks like Walmart as one can see below.
Value Focus
Jefferies said Walmart (NYSE:WMT) expects further increases on 'seasonal items heading into Halloween and the winter holidays,' but remains committed to its value-focused strategy:
'WMT remains committed to its Everyday Low Price strategy and taking less price than its peers,' it said.
Despite inflationary pressures, Jefferies said Walmart believes that the U.S. consumer has been relatively resilient.
'We would categorize the US consumer as consistent,' said Jefferies, though Walmart has seen 'emerging signs of trade down and substitution.'
It is understood that Walmart plans to aggressively compete during the upcoming back-to-school season by 'widening its price gaps on key, high-frequency items,' which it expects will boost share as consumers become more price-sensitive.
Walmart is already performing well against its peers as can be seen below.
In terms of inventory, Jefferies said Walmart expects it to jump in the second quarter given that the 'actual tariff rate is higher than originally expected.'
However, analysts said they are 'not concerned about the health of the inventory.'
Jefferies expects the company to reaffirm its full-year outlook, stating, 'We believe that WMT is well-positioned to achieve its guidance,' even as tariff-related volatility limits near-term upside.
Jefferies has a Buy rating on the stock and a $120 price target.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 28 Buy ratings. Its highest price target is $120. WMT stock's consensus price target is $111.33, implying a 14.06% upside.
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