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HSBC Downgrades Walmart Stock Amidst Concerns
20 Feb
Summary
- HSBC downgraded Walmart to a hold rating from buy.
- Walmart's fourth-quarter earnings beat expectations.
- Current-quarter earnings outlook fell short of expectations.
HSBC has lowered its rating on Walmart shares to a 'hold' from 'buy', expressing concerns about the company's future momentum and guidance. Analyst Joe Thomas adjusted the price target upwards to $131, indicating a limited potential upside of approximately 5% from the current valuation.
Despite reporting a strong fourth quarter with better-than-expected earnings and revenue, Walmart's forward-looking guidance for the current quarter did not meet market expectations. Thomas commended the company's "solid" performance, particularly highlighting its e-commerce segment, which saw a 24% global growth. However, the analyst expressed surprise at the "weak" 2026 outlook given the prevailing positive trends.
Thomas attributed the downgrade to a perceived lack of immediate momentum and a recent surge in Walmart's stock price, which has risen 28% in the past year and 12% this year. The valuation gap between Walmart and competitor Costco has significantly narrowed. The analyst also pointed to the weaker-than-expected guidance for 2027 as further evidence of potentially limited near-term forecast momentum.
