Oppenheimer Downgrades Walmart Shares
On Tuesday, Oppenheimer downgraded Walmart Inc.'s rating from Outperform to Perform and removed its prior $140 price target, citing a less compelling near‑term case ahead of the retailer’s earnings report scheduled for August 20. The downgrade was driven by three primary concerns: potential pharmacy‑related headwinds linked to the Inflation Reduction Act, a valuation that Oppenheimer described as "peakish" and vulnerable to a lower re‑rating if comparable‑sales growth slows, and Wall Street forecasts that already sit above management’s longer‑term guidance.
The analysts, led by Rupesh Parikh, now model a 3% comparable‑sales increase for Walmart U.S. in the second quarter, which falls short of the Street’s 3.8% estimate. They expect continued strength in grocery sales but anticipate moderating growth in general merchandise and health‑and‑wellness categories.
Following the downgrade, Walmart shares slipped 1.4% in U.S. pre‑market trading as of 08:22 ET (12:22 GMT). The stock is down 1% year‑to‑date, underperforming the S&P 500’s 11% gain. After rallying 72% in 2024 and 23% in 2025, the retailer now trades at roughly 36× next‑twelve‑months earnings estimates, compared with its historical average of 23× and a recent all‑time high of 44× reached in April.
Despite the downgrade, Oppenheimer left its intermediate‑term earnings forecasts unchanged and does not expect the slower pharmacy growth—stemming from a brand‑to‑generic mix shift—to impair Walmart’s overall profit delivery. The firm’s base case assumes earnings of $3.10 per share in fiscal 2027 (ending January 2028) and estimates a near‑term price range in the low $90s to low $100s, still reflecting a significant premium to the company’s trading history.
Oppenheimer retained a favorable view of Walmart’s longer‑term prospects, highlighting continued share gains, growth in alternative revenue streams such as advertising and membership, improvements in e‑commerce profitability, and benefits from artificial‑intelligence investments. The analysts also praised the leadership of President and CEO John Furner.