Oppenheimer's analyst Rupesh Parikh expressed concerns about Walmart's near-term profit outlook, downgrading the retailer from outperform to perform and removing the previous $140 price target, which suggested a 26% upside.
The downgrade is based on three main factors: challenges in the pharmacy segment that could result in lower comparable sales growth, a valuation that appears high given historical averages, and overly optimistic Street forecasts that leave little room for positive surprises.
Despite these concerns, Oppenheimer maintains its earnings projections for Walmart, expecting profits of $2.81 per share in 2026, up from $2.64 in 2025.
The firm still believes Walmart can achieve its long-term sales and earnings targets, but anticipates that the stock may decline ahead of its fiscal second-quarter earnings report on August 20, especially given its current trading at 37 times forward earnings compared to a historical average of 23 times.
Parikh emphasized that this cautious stance is temporary, as Oppenheimer remains optimistic about Walmart's long-term growth potential and management's ability to capture market share under CEO John Furner