Walmart's (WMT) softer US comparable sales and Q3 outlook are largely due to health and wellness headwinds and other timing factors, and should not affect the company's profit outlook, RBC Capital Markets said.
US comparable store sales growth came in at 2.6% for Q2, compared with the consensus estimate of 3.7%, driven by headwinds in health and wellness, analysts said.
Excluding health and wellness, the company noted that core comparable sales have remained consistently in the 3% to 4% range and expects the trend to continue in the second half. The weakness is negative for revenue but neutral to profit, the analysts added.
Walmart increased its revenue, margin and adjusted EPS guidance for fiscal 2027 despite more than $2 billion of incremental fuel-related costs. The analysts said the raised outlook reflects greater benefits from price investments.
The timing shift of Flipkart's Big Billion Days from Q3 into Q4 creates a roughly 100-basis-point headwind to Q3 constant-currency net sales growth, but reverses as a roughly 100-basis-point tailwind in Q4. The investment firm said Walmart's recent stock price weakness is a buying opportunity.
RBC maintained its outperform rating on the stock and cut its price target to $131 from $137.
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