Morgan Stanley Thinks Walmart Stock Can Reach $150. Here’s Why

Key Takeaways

Some Wall Street analysts think Walmart (

WMT

) shares are nearing a top. One research team thinks the retailer’s strong
profit margins
could help them keep climbing.

The market doesn’t appreciate how much momentum
Walmart
’s strategy has, Morgan Stanley analysts wrote in a Tuesday note, saying that the company has the profit margins to invest in robots and other technology to drive efficiencies in its
e-commerce
businesses, for example.

Morgan Stanley gave the retailer a
price target
of $115—about 10% above Wednesday’s $104 closing price–ahead of the company’s scheduled earnings release tomorrow morning. But its analysts’ bull case sees the shares rising above $150, which would mark a higher level than any of the analysts tracked by Visible Alpha currently predict.

“As
Walmart+ membership
continues to grow, the [first-party and third-party] e-commerce businesses stand to benefit, which yields greater data insights and ‘shots on goal’ for Retail Media, which fuels more profit and reinvestment in [Walmart’s] core
value proposition
both in grocery and in general merchandise,” the note said. “This flywheel has never been stronger.”

Other Analysts See More Limited Upside

Walmart shares are trading near a 20-year high and are “unlikely to see meaningful multiple expansion beyond current levels,” Bank of America analysts wrote last week. “Tough comparisons/high expectations for [Walmart] going forward could limit potential for upward stock price momentum relative to peers.”

Bank of America maintained a “buy” rating for Walmart,
as did nearly all
of the other analysts who follow
Walmart
and are polled by Visible Alpha. The analysts’ average consensus price target per Visible Alpha is around $109.

Analysts broadly expect Walmart to announce roughly $180.4 billion in revenue for the fourth quarter and $5.2 billion in net income—the latter of which would be up more than 6% year-over-year, according to Visible Alpha. For the full fiscal year, they’re anticipating revenue of $680.9 billion and a roughly 12% jump in
net income
to $20.1 billion.

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