Walmart(NYSE: WMT) generated quite a splash with several items of news last week. It reported its fourth-quarter and full-year 2023 earnings where the company said its online global fourth-quarter sales grew 23% year over year, surpassing $100 billion for the full year. And the retail giant announced an acquisition that gave investors a peek into its next planned phase of growth.
That led Piper Sandler analyst Edward Yruma to raise his firm's price target on the company to $76 per share (adjusted for Walmart's recent 3-for-1 stock split) while maintaining a "strong buy" recommendation. That bullish price target represents 30% upside for what many might consider a boring, stodgy stock.
E-commerce and advertising
Walmart increased sales, earnings per share, profit margin, and operating income in the fourth quarter and for the full year. But it wasn't just its financial results that led Yruma to boost his firm's price target for the company.
The analyst not only sees Walmart offering customers more value in an environment where some consumers are looking to cut back, but also creating ways to enhance the Walmart shopping experience.
That is based on the company's strong e-commerce growth, but also how it can leverage the just-announced $2.3 billion acquisition of smart TV maker Vizio. Walmart should be able to retain and expand its already large customer base with the acquisition. It provides the retailer access to data and the ability to generate meaningful additional ad revenue going forward.
That business model might sound familiar if you have followed the successful trail that Amazon has blazed. If it's successful, the 23% return from Walmart's stock over the last year will look tame relative to its future prospects.
Walmart also raised its dividend by 9%, marking the largest increase in more than 10 years. That confidence from management only reinforced what many investors gleaned from Walmart's quarterly report and its Vizio acquisition.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Howard Smith has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.
