BofA cuts Walmart stock price target on comp sales deceleration

BofA Securities revised its price target on Walmart Inc. (NYSE:WMT) to $126 from $144, while keeping a Buy rating on the stock. The downgrade was attributed to a slowdown in U.S. comparable sales, excluding fuel, which slowed to 2.6% in the latest quarter. The firm's decision was further influenced by Walmart's premium valuation, with the stock trading at a P/E ratio of 36.3, suggesting overvaluation relative to its Fair Value.

Despite these concerns, BofA Securities maintains its Buy rating, seeing the stock price decline as a chance to invest in a long-term growth stock. The firm pointed out positive signs within Walmart, including a 5.9% year-over-year revenue growth and a market capitalization of $827 billion. Walmart delivered stronger-than-expected earnings in its fiscal second quarter, with adjusted earnings per share of $0.81 and revenue of $187.9 billion, exceeding analyst expectations of $0.74 per share and $186.75 billion in revenue.

However, Walmart's stock still saw a 8.9% decline in premarket trading, raising questions about the quality of the earnings and concerns over costs related to price investments and tariff benefits.