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As the market eagerly anticipates Walmart's fourth quarter earnings report, one question looms large: Can Walmart continue its stock momentum? With analysts showing a generally bullish outlook, investors are poised to see how the retail titan will fare in the upcoming earnings announcement.
Walmart is set to report its fourth quarter earnings before the opening bell on Thursday, February 20, 2025. Analysts expect sales and profits to rise, with estimates pointing to a revenue of $180.2 billion, marking a nearly 4% increase year-over-year. Alongside this, Walmart's adjusted earnings per share is projected to rise to $0.64, which is a 7% improvement from the previous year. If these estimates hold true, it would represent a significant shift in the competitive landscape, potentially marking the first quarter where Walmart’s revenue dips below that of Amazon, which reported $187.8 billion last month.
Most analysts, 20 out of 21 according to Visible Alpha, maintain "buy" ratings on Walmart stock, with only one holding a "hold" rating. However, the average price target for Walmart stock currently sits at $107.76, just under 4% above its closing price last Friday. This conservative target suggests that analysts are waiting for a clearer picture of Walmart's outlook for fiscal 2026. After an impressive 85% surge over the past year, expectations are understandably high.
In the weeks leading up to the earnings report, several analysts have raised their price targets for Walmart, reflecting their confidence in the company’s ability to gain market share and exceed estimates. Morgan Stanley and Deutsche Bank have both increased their targets to $115, while JPMorgan and Bank of America have set theirs to $112 and $120, respectively. This uptick in price targets signals a sense of optimism in the market regarding Walmart’s ability to navigate challenges and capitalize on growth opportunities.
Melius Research pointed out that their primary concern lies in the high expectations set by the market. They project that while Walmart may beat fourth-quarter estimates, it will likely adopt a conservative stance regarding its initial projections for fiscal 2026. Analysts suggest that Walmart's ability to maintain a strong share price this year is plausible, especially given the current economic landscape.
Amid increased uncertainty in the market, including tariff policies and shifts in consumer behavior, analysts from Morgan Stanley emphasize a trend toward companies that demonstrate quality and scale. Walmart's extensive supply chain capabilities and bargaining power position it well to tackle potential economic headwinds effectively.
The upcoming earnings report is particularly crucial as it will set the tone for the retail industry and provide insights into consumer spending trends. Unlike some competitors, Walmart’s stronghold in staple categories, such as groceries, allows it to weather economic downturns better than retailers exposed to discretionary goods.
Moreover, Walmart has successfully attracted higher-income households through its digital offerings while also maintaining significant exposure to lower-income consumers. This dual strategy helps to balance the impact of inflation on its overall business. As consumers increasingly prioritize spending on essential goods, Walmart’s value orientation and robust digital strategy position it favorably in the evolving retail landscape.
With its fourth quarter earnings report just around the corner, all eyes will be on Walmart. Will it continue to outperform its peers and maintain the market momentum it has enjoyed throughout the year? Investors are keen to see if Walmart can not only meet or exceed expectations but also provide a robust outlook for the future. The stakes are high, and the results may have significant implications not just for Walmart, but for the broader retail sector.
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