Walmart delivered a mixed quarter for Wall Street, with revenue and profits continuing to rise but its shares falling more than 9% following the results. The decline prompted JPMorgan to lower its near-term price target for the retail giant while maintaining an outperform rating.
JPMorgan reduced its Walmart stock price target to $125. The shares were trading near $104 at the time of writing, giving the retailer a market capitalisation of roughly $825 billion.
Despite the recent weakness, Walmart has delivered more than 400% in shareholder returns over the past decade, including reinvested dividends. That strong performance has pushed the stock to around 35 times forward earnings, a premium valuation for a company expected to grow earnings at an annualised rate of about 8.7% over the next five years.
Pharmacy Business Weighs on Results
The main pressure point in Walmart’s latest quarter was its health and wellness business, particularly pharmacy operations.
Chief Financial Officer John David Rainey said new maximum fair pricing regulations reduced total comparable sales by 125 basis points during fiscal 2027’s second quarter, compared with the 100-basis-point impact Walmart had anticipated.
U.S. comparable sales increased 2.6% during the quarter. Excluding health and wellness, however, growth would have been closer to the 3% to 4% range Walmart has consistently delivered over the past two and a half years.
CEO John Furner described the quarter as positive overall, noting that sales growth reached the upper end of guidance while adjusted operating income increased 17.4% on a constant-currency basis.
According to Furner, the pharmacy business obscured stronger underlying momentum across grocery, general merchandise and e-commerce.
Growth Beyond Traditional Retail
JPMorgan’s decision to retain its outperform rating reflects confidence in Walmart’s expanding revenue streams, despite the short-term pressure on its pharmacy operations.
The company’s advertising business recorded 38% growth in global revenue during the quarter, while U.S. marketplace sales surged 52%.
Membership income also increased nearly 17% globally, supported by strong momentum in Walmart Plus. The membership programme recorded its strongest first-half growth in subscribers since its launch.
The combination of advertising, marketplace, membership and e-commerce growth is increasingly broadening Walmart’s earnings base.
For investors, the lower price target signals near-term caution, but JPMorgan’s continued outperform stance suggests the bank remains constructive on Walmart’s longer-term growth prospects as newer businesses gain scale.
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