Investors have been worrying about inflation, recession, and economic data that could torpedo this year's stock market run. But Walmart (WMT +0.41%) just reported its fiscal second-quarter earnings, which soothed many of those concerns. After a report that beat estimates on both the top and bottom lines, its stock is flying.
Now, one Wall Street analyst thinks there's more to come, even as shares of the world's largest retailer have already soared by 40% this year. In a report released after Walmart's earnings update, Jefferies analyst Corey Tarlowe pointed to reasons he thinks the stock is worth buying. He has a price target of $80 on Walmart shares, implying gains of an additional 10%.
NASDAQ: WMT
Key Data Points
Walmart embraces artificial intelligence (AI) and automation
In the earnings conference call with investors, Walmart CEO Doug McMillon named four specific reasons consumers have been flocking to his company's stores. He said shoppers want value, a broad assortment, convenience, and a company they can trust. He sees Walmart as a leader in all four areas.
But there's another reason the company bested analyst predictions for both sales and earnings in the second quarter. It's embracing technology and artificial intelligence (AI) in retail.
During the call, McMillon stated, "We're finding tangible ways to leverage generative AI to improve the customer, member and associate experience." That includes utilizing data and large language AI models to drive its product offerings to what consumers are looking for.
The Jefferies analyst said that's an integral reason why he believes Walmart shares have more room to run. The company raised its outlook for the current full fiscal year with both sales and operating income expected to grow in the low- to mid-single digits. That would be a very respectable outcome for the global retailer in a backdrop where other consumer products companies are predicting a slower second half of the year.
