Walmart’s (WMT) fiscal Q4 results are expected to deliver adjusted EPS of $1.61 and growth of 2% for US comps, both “slightly below” consensus estimates, BofA Securities said Wednesday in a report.
Still, Walmart is “well-positioned for share gains and improving profitability both near and long-term,” BofA said. The company’s results are due on Tuesday.
BofA’s fiscal Q4 comp estimates represent a deceleration compared with fiscal Q3’s growth of 4.9% due to “moderating grocery inflation” and “likely continued softness in general merchandise,” the report said.
Strong observed sales and transactions in fiscal Q4 “according to Bloomberg Second Measure credit and debit card data implies potential for upside,” the report said.
BofA expects “grocery share gains” and “trade-down” to back Walmart’s store and online transactions as “consumers continue to manage grocery inflation (25%+ versus pre-COVID), the reduction in SNAP benefits and the return of student loan repayments.”
The retailer’s gross margin will likely be supported by “growing digital ad contributions,” BofA said.
BofA kept its buy rating on Walmart with a price target of $190.
Shares of Walmart fell 0.7% in recent Wednesday trading.