Walmart Inc. shares closed Monday's session down 1.65% at $129.02, with the decline continuing in after-hours trading to $128.85. The stock moved within a daily range of $128.09 to $131.79 during regular trading hours.
This pullback comes ahead of the retail giant's fiscal fourth-quarter earnings report scheduled for February 19. Despite the recent weakness, two prominent analyst firms have increased their price targets on the company. Oppenheimer raised its target to $140 from $125, while Mizuho lifted its target to $137 from $125, with both maintaining Outperform ratings.
The timing presents a valuation challenge for Walmart, which recently surpassed a $1 trillion market capitalization, joining an elite group of companies typically dominated by technology firms. This milestone has heightened scrutiny of the company's financial metrics, particularly as its price-to-earnings ratio reportedly approaches 45, significantly above its five-year average of 35 and the S&P 500's multiple of approximately 25.
Investors are focusing on several key areas in the upcoming report: margin performance, forward guidance, grocery market share trends, and the profitability of digital growth initiatives. Updates on advertising revenue and membership programs will also be closely monitored.
Market participants appear concerned about potential downside risks, including cautious outlook statements or unexpected pressures from labor, logistics, or markdown expenses. With elevated expectations following the recent price target increases and trillion-dollar valuation achievement, Walmart faces heightened pressure to deliver strong results that justify its premium valuation.
The company will release earnings materials at approximately 6 a.m. CT on February 19, followed by a management conference call at 7 a.m. CT. This event represents the next significant test for the retailer's stock performance amid growing investor focus on valuation sustainability.
