Walmart Earns Analyst's Confidence As Market Share Gains Persist

Walmart Inc. (NASDAQ:WMT) shares are trading higher on Friday.

The company disclosed that it paid $100 million to settle a lawsuit that accused the U.S. retailer of misleading its delivery drivers about their compensation, causing substantial income loss.

• Walmart stock is gaining positive traction. Why is WMT stock trading higher?

BofA Securities analyst Christopher Nardone reinstated a Buy rating on the stock with a price forecast of $150.

The analyst wrote that the company continued to capture market share among higher-income shoppers through expanded, faster delivery options, while maintaining its value appeal to lower-income consumers with its everyday low-price strategy.

The analyst expected steady sales momentum and faster profit growth, driven by prior investments, to support additional positive EPS revisions and gradual multiple expansion.

Nardone noted the declining mix of general merchandise within Walmart U.S. weighed on gross margin by roughly 200 bps in recent years.

The analyst expected this headwind to moderate and potentially turn into a tailwind over the medium term.

Improved trends in categories such as apparel and hardlines, supportive inflation dynamics and expected benefits following tax refund season could lead to a recovery in general merchandise, added the analyst.

The analyst wrote that at the same time, growth in the third-party marketplace lowered inventory risk and enhanced profitability.

WMT Price Action: Walmart shares are up 2.51% at $127.54 at the last check on Friday.

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