Walmart (NYSE:WMT) shares moved lower in U.S. pre-market trading after Oppenheimer downgraded the retail giant to “Perform” from “Outperform,” citing a less attractive near-term outlook ahead of the company’s earnings release on August 20.
The brokerage also withdrew its previous $140 price target, and Walmart shares fell 1.4% by 08:22 ET (12:22 GMT).
Oppenheimer Sees Near-Term Challenges
Analysts led by Rupesh Parikh said three key factors prompted the downgrade.
These include potential pressure on Walmart U.S. comparable sales from pharmacy-related changes linked to the Inflation Reduction Act, a valuation they consider elevated, and Wall Street earnings expectations that already exceed management’s long-term guidance.
The firm believes these factors could leave the stock vulnerable if comparable sales growth slows.
Comparable Sales Forecast Below Consensus
Oppenheimer now expects Walmart U.S. comparable sales to increase by 3% in the second quarter, below the market consensus forecast of 3.8%.
The analysts expect grocery sales to remain resilient, while growth in general merchandise and health and wellness is likely to moderate.
Valuation Remains a Concern
Walmart shares have declined about 1% so far this year, lagging the S&P 500, which has gained approximately 11%.
The weaker performance follows two years of exceptional gains, with Walmart stock climbing 72% in 2024 and a further 23% in 2025.
According to Oppenheimer, the company currently trades at roughly 36 times expected earnings over the next 12 months, well above its long-term historical average of around 23 times, although below the record multiple of 44 times reached in April.
“Although investors in our conversations lately expect a potential Walmart U.S. comp shortfall vs. Street forecasts, we still believe shares could move lower on the print given a still peakish valuation and the potential for pharmacy headwinds to persist at least through Q426,” the analysts wrote.
Long-Term Outlook Remains Positive
Despite the downgrade, Oppenheimer said it has not changed its medium-term earnings projections and does not expect slower pharmacy growth to materially affect Walmart’s overall profitability.
The brokerage also reiterated its confidence in the retailer’s longer-term prospects.
“Although we are stepping to the sidelines, we still remain very upbeat on WMT’s longer-term prospects,” the analysts said.
The firm highlighted Walmart’s continued market share gains, expanding higher-margin businesses such as advertising and membership services, improving e-commerce profitability and ongoing investments in artificial intelligence as important long-term growth drivers.
Oppenheimer also praised the leadership of President and Chief Executive Officer John Furner.
Earnings Outlook and Valuation Target
The brokerage’s base-case forecast assumes Walmart will generate earnings of $3.10 per share in fiscal 2027, which ends in January 2028.
Oppenheimer added that a potential near-term floor for the shares could lie in the low-$90 to low-$100 range, a level that would still represent a premium to the company’s historical valuation.
Walmart stock price
