BofA Securities analyst Robert F. Ohmes reiterated the Buy rating on Walmart Inc.
The company will report third-quarter fiscal 2025 earnings on Tuesday, November 19. The analyst expects $0.52 in adjusted EPS and a 3.5% increase in U.S. comps.
The analyst projects potential upside for the quarter, as Bloomberg Second Measure credit and debit card data shows an acceleration in Walmart sales, contrasting with BofA and Street comp forecasts that suggest deceleration.
The third-quarter comps are expected to reflect positive year-over-year transactions, driven by strength in grocery and health/wellness, Ohmes writes.
The analyst notes that Walmart continues to gain share across all income levels, including lower-income consumers, where some competitors are facing pressure.
Per Ohmes, this is driven by Walmart's strong value offering and high digital convenience.
The company's store remodels, expanded online SKU selection (including through its third-party marketplace), and improved express delivery capabilities are contributing to strong transaction and unit growth. Walmart+ membership also saw double-digit growth in the second quarter, the analyst adds.
For the holiday season, Ohmes sees a shortened selling period, with 5 fewer days between Thanksgiving and Christmas compared to last year. This is likely to lead to higher online spending, benefiting large digital and omni-channel retailers like Walmart, the analyst adds.
Ohmes projects Walmart's gross margin to expand. Higher-margin profit streams like digital advertising, third-party marketplace, and fulfillment services will drive this growth.
The analyst writes that these gains should help offset sales mix challenges, as general merchandise is likely to continue lagging grocery and health/wellness.
Price Action: WMT shares are trading higher by 0.83% to $84.91 at last check Tuesday.
