This Analyst Raises Walmart's Estimates Ahead Of Q1 Earnings: Read Why - Walmart (NYSE:WMT)

Telsey Advisory Group analyst Joseph Feldman reiterated an Outperform rating on the shares of Walmart Inc. WMT, with a price target of $160.
The analyst raised estimates of Walmart ahead of its first-quarter earnings on May 18, signaling strong demand for groceries, gains from the trade down of upper-income consumers, higher food inflation (Food CPI of +7.1% in April), and multiple initiatives, including digital and store resets.
Feldman raised the 1Q EPS estimate to $1.33 from $1.30. The analyst sees sales growth of 4.7% to ~$148.3 billion, up from $147.9 billion.
Walmart's robust financial flexibility and lower supply chain costs will likely drive growth and profitability.
For the full year, the analyst increased the adjusted EPS estimate to $6.13 from $6.05.
In the long haul, Walmart is particularly likely to gain from advertising, merchant services, last-mile delivery (e.g., Spark), health services, and digital payments.
However, the operating margin in 1Q is expected to be flat at 3.8%, with an anticipated retail gross margin compression of 38 bps to 23.5%.
The analyst cautioned that the 1Q margins are expected to bear the brunt of an unfavorable product mix shift toward grocery, LIFO charges, and select promotions.
Price Action: WMT shares are down by 0.15% to $152.93 on the last check Friday.