{"id":2680,"date":"2026-05-11T23:01:58","date_gmt":"2026-05-11T23:01:58","guid":{"rendered":"https:\/\/www.fintechpulse8.com\/?p=2680"},"modified":"2026-05-11T23:01:58","modified_gmt":"2026-05-11T23:01:58","slug":"morgan-stanley-revisits-walmart-stock-price-target-pre-earnings","status":"publish","type":"post","link":"https:\/\/www.fintechpulse8.com\/?p=2680","title":{"rendered":"Morgan Stanley revisits Walmart stock price target pre-earnings"},"content":{"rendered":"
<\/p>\n
There’s a version of Walmart most people still picture. Fluorescent lights, crowded aisles, maybe a cart with a wobbly wheel. That version still exists. But the company Wall Street is paying 43 times forward earnings for? That’s a different beast entirely.<\/p>\n
As of 2026, Walmart is a 63-year-old company, and the second-largest by revenue globally and the largest private employer in the world, with approximately 2.1 million employees.<\/p>\n
Morgan Stanley met with Walmart (WMT) management during the quarter. What they heard reinforced a thesis the firm has been building for a while. Walmart’s e-commerce, membership, and advertising businesses are compounding in ways that brick-and-mortar retail never could.\u00a0<\/p>\n
“Valuation should remain supported as WMT translates its scale and tech advantages,” Morgan Stanley wrote in a note shared with me at TheStreet.<\/p>\n
Morgan Stanley reiterates Walmart stock overweight rating and $140 price target<\/h2>\n
On May 10, 2026, the firm reiterated its overweight rating and $140 price target ahead of the company’s first-quarter fiscal year 2027 earnings, scheduled for May 21, according to the note.<\/p>\n
The phrase Morgan Stanley keeps coming back to is “flywheel.” It’s not just a buzzword here. It describes a self-reinforcing loop where e-commerce growth pulls in marketplace sellers, who attract advertisers, whose dollars fund better pricing and convenience, which attracts more shoppers.<\/p>\n
More Walmart:<\/strong><\/p>\n
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Walmart makes a change to be more like Costco<\/strong><\/li>\n
Amazon and Walmart can\u2019t stop a $12 billion theft problem<\/strong><\/li>\n<\/ul>\n
My review of the data suggests the flywheel is spinning faster than the headline numbers imply. In the fourth quarter of fiscal 2026 on Feb. 19, Walmart U.S. e-commerce sales grew 27% year over year. Walmart Connect, the company’s advertising business, grew 41% YoY in the same period, according to Walmart’s earnings report.<\/p>\n
Now, Morgan Stanley says Walmart is beginning to export that model internationally, taking the U.S. advertising and marketplace playbook into global markets. That’s a newer development worth watching.<\/p>\n
Morgan Stanley’s AlphaWise survey also pointed to record Walmart+ membership counts heading into the quarter, a signal that the membership flywheel is still accelerating, the note indicated.<\/p>\n
What Morgan Stanley expects from Walmart’s Q1 earnings<\/h2>\n
Wall Street’s consensus estimate for Walmart U.S. comparable store sales growth in Q1 sits at 3.9%, according to the Morgan Stanley note. But Morgan Stanley thinks investor expectations are quietly running higher in the 4.0% to 4.5% range.<\/p>\n
Morgan Stanley sees roughly two points of upside to consensus estimates for adjusted operating income and earnings per share (EPS) growth of 8% in Q1, according to the note. A few factors are driving that view:<\/p>\n
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Food inflation:<\/strong> It’s running at roughly 2.3% in February and March 2026, providing a supportive backdrop for grocery comps.<\/li>\n
Trade-down dynamics:<\/strong> Higher-income households continue to shift toward Walmart for value.<\/li>\n
FX tailwind:<\/strong> The Mexican peso strengthened roughly 16% against the U.S. dollar during the quarter, a net positive, given that Walmart de M\u00e9xico represents about 13% of consolidated adjusted operating income.<\/li>\n
Pharmacy headwind:<\/strong> Maximum Fair Pricing implementation and a shift toward lower-cost generic GLP-1 prescriptions will drag comps by roughly 100 basis points. \nSource: Morgan Stanley note\n<\/li>\n<\/ul>\n
I crunched the numbers on the freight and diesel picture. Morgan Stanley estimates a roughly $1 billion annualized headwind to profitability at current prices, though the Q1 impact is expected to be limited to around $100 million before mitigating actions, according to the note.<\/p>\n\n
Walmart trades at roughly 43 times next-12-months price-to-earnings (P\/E), about 21 times above its 10-year historical average.<\/p>\n
Bloomberg via Getty Images<\/p>\n<\/figcaption><\/figure>\n
Why Walmart’s full-year guidance is likely staying put for now<\/h2>\n
Here’s the part that could frustrate bulls looking for a raise. Morgan Stanley doesn’t expect Walmart to lift its full fiscal-year 2027 guidance after Q1, and the culprit is gas prices.<\/p>\n
Walmart has a well-established pattern of underpromising and overdelivering. Its standard algorithm calls for roughly 4% constant-currency net sales growth with operating income growing modestly faster.\u00a0<\/p>\n
Related: Morgan Stanley revamps Rockwell Automation stock price target<\/strong><\/p>\n
In fiscal 2027, initial guidance called for 6% adjusted operating income growth in constant currency, the note explained. But with diesel and freight costs spiking, management is likely to hold the line for now.\u00a0<\/p>\n
Morgan Stanley expects Q2 guidance to imply sequential acceleration, partly because a roughly $450 million general liability claims expense that hit Q2 of fiscal 2026 won’t repeat, removing a nearly six-point headwind to operating income growth, according to the note.<\/p>\n
Why Morgan Stanley thinks Walmart deserves a premium valuation<\/h2>\n
Walmart trades at roughly 43 times next-12-months price-to-earnings (P\/E), about 21 times above its 10-year historical average, according to the Morgan Stanley note. That’s an eyebrow-raising number.<\/p>\n
Morgan Stanley’s answer? Walmart isn’t the same company it was a decade ago. Its $140 price target is based on roughly 44 times blended P\/E on fiscal 2028 EPS estimates of $3.19. The firm’s bull and bear scenarios imply 31% upside and 23% downside from current levels ($130.43\u00a0when Morgan Stanley released the report).<\/p>\n
The argument is straightforward. Walmart went from a retailer being disrupted by Amazon (AMZN) to an e-commerce and supply chain disruptor in its own right. In a market rewarding durable compounders with defensive qualities, that repositioning justifies a premium, at least in Morgan Stanley’s view.<\/p>\n
Related: Walmart announces unique strategy to drive sales<\/strong><\/p>\n
There’s a version of Walmart most people still picture. Fluorescent lights, crowded aisles, maybe a cart with a wobbly wheel. That version still exists. But the company Wall Street is… <\/p>\n","protected":false},"author":1,"featured_media":2681,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[246],"tags":[479,4668,100,4108,480,91,1196,807],"class_list":["post-2680","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-popular","tag-morgan","tag-preearnings","tag-price","tag-revisits","tag-stanley","tag-stock","tag-target","tag-walmart"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/2680","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2680"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/2680\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/media\/2681"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2680"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2680"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2680"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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