Walmart (WMT 1.00%) stock has delivered solid gains for investors over the last few years. Solid fiscal fourth-quarter earnings results pushed the share price to new highs, and UBS analyst Michael Lasser believes Walmart will deliver another round of solid earnings for the first quarter of fiscal 2025.
The analyst recently maintained a buy rating on the stock but raised the price target from $63 to $69, implying 14% upside over the share price as I write.
Is the stock a buy?
Walmart finished fiscal 2024, ending in January, with solid growth where it counts. U.S. stores posted a comparable sales increase of 4% year over year in fiscal Q4, which helped investors brush off fears of weak consumer spending hurting Walmart's business in the near term. For the current fiscal year, Wall Street's consensus estimate has the company's total revenue growing 3.9% with adjusted earnings per share increasing by 6.3%.
On top of solid sales growth in stores, the company is also having success in e-commerce, with online sales up 23% last quarter. This is carrying over to strong growth in advertising, which is boosting Walmart's ability to grow profits faster than revenue.
Two things will need to happen for the stock to hit the analyst's price target. Walmart will need to deliver on Wall Street's earnings growth estimates, and investors will need to pay a price-to-earnings (P/E) ratio of 30 on expected fiscal 2025 earnings of $2.36.
That P/E multiple is in line with Walmart's previous five-year trading history, so assuming there isn't a recession or other obstacle that hurts the company's performance, the stock could reach the $69 price target this year.
