Walmart Earnings and Investor Day Are Coming. What to Know. - Barron's

Walmart continues to move its business beyond just retail.
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Walmart’s fiscal fourth-quarter earnings and virtual investor day are on tap this week, and Bank of America Merrill Lynch believes that both events will hold good news for the retail giant’s shareholders.

Analyst Kendall Toscano reiterated a Buy rating and $175 price target on Walmart stock (ticker: WMT) on Friday, writing that she thinks there are multiple factors that could lead to a better-than-expected fourth quarter.

Walmart reports earnings and hosts its virtual investor day on Thursday.

Toscano expects that Walmart continued to benefit from its robust omnichannel platform in the quarter, and that its e-commerce business is becoming more profitable, while both digital and bricks-and-mortar traffic accelerated. She points to peer Target (TGT), which turned in healthy holiday sales last month. She also highlights the most recent round of stimulus, which consumers—especially lower-income ones that make up much of Walmart’s base—were quick to spend, mostly at large stores.

Toscano is also upbeat about ongoing strength in its grocery division, as the Covid-19 pandemic keeps shoppers cooking and eating more at home. Walmart also has returned to more normalized hours, following a reduction in 2020 because of the pandemic.

Looking ahead, she thinks Walmart will address its growing digital business and plans to diversify its revenue streams at the investor event.

The company also has seen success in growing its third-party marketplace, as sales have soared in recent quarters, Toscano says. She predicts that management could provide a sunny update about Walmart+, the subscription service launched in September that has already performed beyond of some analysts’ expectations.

She also points to other recent ventures the company has made outside of its core-retail business, including human and animal healthcare, and fintech and financial services. She believes the recently created media business Walmart Connect will become a major advertising platform.

Write to Teresa Rivas at teresa.rivas@barrons.com

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