Walmart’s (WMT) alternative businesses have the potential to contribute nearly one-third of its profit over the next three years and transform the company from a global retailer into a “versatile, technology-driven behemoth,” UBS said in a note Monday.
The company’s strategic diversification into areas like advertising, marketplace fees, fulfillment services, membership income, and data analytics monetization will continue to reshape Walmart’s profit and loss as the company gains scale in these businesses and evolves into more than a retailer, according to the note.
UBS estimated that about 20% of Walmart’s 2023 earnings before interest and tax came from these new high margin alternative revenue streams and the figure could grow to 31% of the company’s profits in 2026.
“This makes [Walmart’s] long-term investment case compelling,” UBS said in its note.
The firm has a buy rating on the company’s stock with a 12-month price target of $63.