Walmart Stock Has Been Stuck Since April. Why J.P. Morgan Sees 35% Upside.

J.P. Morgan analysts see shares reaching $130 in the next 18 months. (Justin Sullivan/Getty Images)

Walmart stock has been in a rut since April. The retailer may be poised for big gains over the next 18 months, thanks to gains with wealthier shoppers and a savvy tariff strategy, according to J.P. Morgan.

Walmart’s fate is closely tied to the mood of U.S. consumers. No wonder the stock was hit hard by Trump’s tariff announcement, tumbling from $105 in mid-February, before tariff talk ramped up, to $82 just a few weeks later. The stock has since regained some ground, climbing to around $95 in mid-April, but it’s been largely stuck there since. On Thursday, shares traded at $96.61, up 1%, or 93 cents.

Things may soon start coming together for Walmart, however, according to a Thursday note from a team of J.P. Morgan analysts led by Christopher Horvers. The note argues growing market share and improved margins could boost the company’s earnings per share to $3.75 for the fiscal year ending in January 2028. Assuming the stock can trade at 35 times earnings, in line with growth-oriented staples companies, that spells a target price of $130 over the next 18 months, says J.P. Morgan. That implies upside of nearly 35%. He rates Walmart stock at Overweight.

Wall Street analysts are generally bullish on Walmart: 40 out of 42 analysts who follow the stock have Buy ratings, according to FactSet, with just one analyst at Hold and one at Sell. Still, they are mostly more conservative than J.P. Morgan when it comes to the stocks’ potential upside. The analysts’ average 12-month target price is just $111. The average earnings-per-share forecast for the January 2028 fiscal year is $3.25. (To put that in context, Walmart reported operating earnings per share of $2.51 for the year that ended this past January.)

One big factor in Walmart’s favor: The retailer continues to make market-share gains with mid- to high-income consumers, helped by its growing e-commerce presence and the $98-a-year Walmart+ offering, Walmart’s answer to Amazon.com’s Prime membership. Online sales help the company target wealthier shoppers outside the “convenience radius” of its 5,000 stores, notes J.P. Morgan. Meanwhile, the more wealthy shoppers it attracts, the easier time it has persuading high-end brands to join the Walmart ecosystem, creating momentum that builds on itself.

It’s no secret that tariffs are a headache for retailers. Still Walmart is better positioned to cope with the issue than many rivals, and may even be able to use tariffs to its advantage. Walmart’s plan is to hold the line on consumables such as food, maintaining low prices that already undercut many competitors, while playing offense when it comes to general merchandise, further widening price gaps to gain additional market share in those categories, J.P. Morgan notes.

Other Wall Street analysts have a similar take. “The environment is playing into Walmart’s hands” wrote Truist analyst Scot Ciccarelli earlier this month. Unlike most competitors, Walmart can lean on alternative revenue sources, such as advertising and Walmart+ membership fees to make up for any revenue shortfalls. He rates Walmart stock at Buy with a $111 price target.

Walmart may also be able to capitalize on new technology, particularly artificial intelligence, to improve its margins. Walmart’s efforts to automate its supply chain are “in the 3rd to 4th inning,” argues J.P. Morgan.

Meanwhile, the retailer is expected to announce plans to streamline its dozens of AI “agents” that do everything from help with payroll to offer customers personalized shopping tips. Earlier this week, the company also hired Instacart executive Daniel Danker as the head of global AI acceleration, product and design, reporting to CEO Doug McMillon.

Write to Ian Salisbury at ian.salisbury@barrons.com