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Walmart Delivering Continued Strong E-Commerce Growth Would Reinforce Upbeat Bottom-Line Views, Tigress Says

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Walmart Delivering Continued Strong E-Commerce Growth Would Reinforce Upbeat Bottom-Line Views, Tigress Says

Walmart (WMT) delivering continued strong e-commerce growth and robust advertising momentum would reinforce a view that the retail giant can grow earnings "materially faster" than retail sales, Tigress Financial Partners said Monday.

In May, Walmart reported 26% growth in global e-commerce sales for its fiscal first quarter. Its global advertising business surged 37%.

The company's partnerships with Alphabet's (GOOG, GOOGL) Google and OpenAI, as well as "greater automation" are improving efficiency in product discovery, personalization, conversion, and fulfillment, Tigress Chief Market Strategist Ivan Feinseth said in a note to clients Monday. Advertising is becoming "an increasingly important" driver of profit for Walmart, according to Feinseth.

"Continued (20%-plus) e-commerce growth, strong advertising momentum, and higher (fiscal 2027) guidance would reinforce my view that Walmart can grow earnings materially faster than retail sales, increasingly positioning the company as a high-return technology-enabled consumer platform and supporting a compelling long-term investment opportunity," Feinseth wrote.

Walmart is scheduled to release second-quarter results Thursday. Analysts polled by FactSet are looking for non-GAAP earnings of $0.74 a share on revenue of $186.62 billion.

Further proof that higher-margin digital businesses are driving operating income growth faster than sales will be a "more important catalyst" for the company, Feinseth said.

"The combination of Walmart Connect, VIZIO, and Vibe.co creates a differentiated commerce-media ecosystem linking first-party purchase data, (artificial intelligence-powered) targeting, CTV inventory, and closed-loop measurement," Feinseth wrote. "Together, these initiatives create a powerful AI-commerce-media flywheel that should improve customer engagement, monetization, margins, and operating leverage."

Walmart shares were down 1.1% in Monday late-afternoon trade. The stock has increased 2.6% so far this year.

Walmart's ongoing transformation into an AI-enabled commerce, advertising, and media platform continues to back Feinseth's positive investment outlook for the company, supporting further upside in its bottom-line and stock price, according to the note.

Earlier this month, RBC Capital Markets said major US retailers such as Walmart will likely miss consensus expectations for second-quarter comparable sales. Separately, Deutsche Bank said the retail giant is expected to miss second-quarter comparable sales estimates as high gas prices pressure low-income households.

Price: $114.25, Change: $-1.02, Percent Change: -0.89%

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