Walmart Price War Fears 'Overdone,' Bernstein Says, Reiterating Outperform Rating

Analysts at Bernstein have reiterated their Outperform rating on Walmart (NYSE: WMT), arguing that recent investor anxiety regarding intensified price competition is "overdone." The firm maintained its $145 price target, citing the retailer's established market position and a clear strategy for long-term profit growth.

Analyst's Take on Price Competition

In a note to clients, Bernstein analyst Zhihan Ma addressed investor concerns that have surfaced following announcements from competitors. Ma stated that Walmart "remains a price leader and price investment is not new," and expects the company to continue gaining market share by strategically managing its price gaps.

The firm also downplayed fears about the potential impact on profit margins from these investments. Bernstein noted that Walmart is leveraging tariff refunds to help fund its price reductions and to offset the effects of ongoing freight inflation.

A Path to Higher Profitability

According to Bernstein, the key long-term driver for Walmart is its potential to enhance profitability through its omni-channel initiatives, particularly in e-commerce and retail media.

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• E-commerce: While estimating Walmart's U.S. core e-commerce business currently operates at a -6% EBIT margin (fiscal 2026 estimate), Bernstein sees "a path to profitability... by FY2030." This turnaround is expected to be driven by automated fulfillment and denser delivery routes.
• Retail Media: The company's U.S. advertising business is forecast to grow its revenue from approximately $4 billion to $11 billion. This expansion is projected to contribute roughly 75 basis points to Walmart's U.S. EBIT margin.

Market Implications

By combining the improvements from e-commerce and the growth in its high-margin advertising business, Bernstein projects a potential path for Walmart's U.S. segment to achieve a 7% EBIT margin.

This margin expansion could translate into a potential upside of $1.25 in earnings per share (EPS) over the next four years, according to the firm's analysis. Bernstein concluded that the stock's recent pullback has created "a more attractive entry point."