Walmart stock WMT rose in premarket trading on Thursday after Deutsche Bank upgraded the retailer to Buy from Hold and raised its price target to $136 from $113.
Walmart shares gained 2.7% in early trading. The shares have risen more than 8% over the past week.
Deutsche Bank analyst Krisztina Katai and her team see a more favourable outlook for Walmart heading into 2027, citing the retailer’s value proposition, potential market-share gains and opportunities to improve margins.
Deutsche Bank sees a stronger outlook for Walmart
Deutsche Bank said the current inflationary environment could strengthen Walmart’s competitive position as consumers continue to focus on value.
The firm expects this to support faster market-share gains, while investors increasingly look beyond pressure on the company’s headline US comparable sales figures.
Katai said the firm sees a more favourable setup for Walmart as it approaches 2027, with pricing trends and market-share gains potentially supporting its performance.
The analyst team also expects Walmart’s competitive advantages to strengthen as its business evolves beyond traditional retail.
Greater disclosure around gross merchandise volume (GMV), which measures the value of goods sold through a marketplace, could help investors better understand the development of its marketplace operations.
The upgrade follows Deutsche Bank’s investor meetings in New York City with Walmart Chief Financial Officer John David Rainey and the company’s investor relations team.
According to the firm, Walmart management remains highly confident in the underlying business and its long-term growth strategy.
Higher-margin businesses could support profit growth
Deutsche Bank also sees scope for Walmart to improve its incremental margins as higher-margin businesses expand faster than its core retail operations.
The firm expects continued growth in areas such as e-commerce, its third-party marketplace, advertising and membership to support the company’s profitability.
It also expects the benefits of automation to increasingly contribute to Walmart’s profit and loss statement.
Katai said the combination of improving pricing trends, accelerating market-share gains and a strengthening business model could support the retailer’s performance.
Walmart management highlighted some of its strongest recent food market-share gains, alongside continued momentum in e-commerce, marketplace expansion, advertising and membership growth, during the meetings with Deutsche Bank.
These areas are central to the bank’s more positive assessment of the retailer’s prospects.
However, the upgrade reflects the firm’s expectations for the business rather than a guarantee of future share-price performance.
Analyst sentiment remains largely positive
Deutsche Bank’s upgrade adds to an already broadly positive analyst outlook for Walmart. According to Koyfin data, 37 of the 43 analysts covering the stock rate it a Buy or Strong Buy.
The shares’ recent gains and Thursday’s premarket advance indicate renewed investor interest following the rating change.
Walmart’s ability to sustain market-share growth and expand higher-margin operations will remain important factors in the outlook outlined by Deutsche Bank.
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