Walmart (WMT) remains a healthy, effectively managed company with “solid growth” and “strong flow through,” RBC Capital Markets said in a note, raising its Q2 earnings estimate to $0.64 per share from $0.62 and increasing its price target $70 from $62. “A growing profit contribution from advertising and membership income supports a re-rating,” RBC said, maintaining its outperform rating. Walmart’s Q1 results had “few holes to poke,” RBC said, noting that management had shared that sales were consistent when normalized for unusual calendar and weather events. Also important is that customers’ grocery purchases increasingly include lower-priced proprietary Walmart brands, giving the retailer “more leverage in supplier negotiations,” the analysts said.

Walmart is one of the most mentioned companies in the U.S. across all news items in the past 12 hours, according to Factiva data. The retailer’s net income hit $5.1 billion in the fiscal first quarter, or 63 cents a share, versus a FactSet consensus estimate of 52 cents a share. Revenue grew 6% to $161.51 billion, compared with analyst expectations of $159.6 billion. Walmart expects second-quarter adjusted EPS of 62 cents to 65 cents, compared with the FactSet consensus of 64 cents. It expects full-year adjusted EPS to be at the high-end or slightly above original guidance of $2.23 to $2.37, with net sales at the high end or slightly above the previously expected range of a 3% to 4% increase. Dow Jones & Co. owns Factiva.

We lift our 12-month target to $72 from $68, 27.2x our FY 26 (Jan.) EPS of $2.65 (up from $2.61; FY 25’s up to $2.46 from $2.42) vs. the 24x historical average. FQ1 (Apr-Q) adj-EPS of $0.60 (+22% Y/Y) beat the $0.52 consensus, with Walmart U.S. comp sales up 3.8% (+3.8% transactions; 0% average ticket) vs. 3.5% consensus. Adj-operating income grew 14% Y/Y, with margin +30 bps Y/Y to 4.4%. While WMT raised its FY 25 guidance, we think it is still conservative given the strength and momentum in all three segments (i.e., Walmart U.S.; International; Sam’s Club). We keep a Buy, as we see market share gains continuing, not just in grocery, but also in general merchandise due to WMT’s rapidly growing online marketplace. We believe WMT has plenty of long-term growth in its higher-margin services streams (e.g., advertising, fulfillment services, data analytics, subscriptions), which, in addition to changes

Consumers are responding to Walmart’s lower prices with strong sell-throughs, CEO Doug McMillon says on a call with analysts following the retail giant’s 1Q results. The company’s making progress lowering prices, which McMillon says are important to its customer and membership base. Walmart recently announced the biggest release of a private food brand in 20 years, with 70% of the products priced under $5. “Our combination of everyday low prices plus a large number of rollbacks is resonating.” Shares rise 5.9% to $63.33.