Walmart Inc.’s
WMT,
membership program Walmart+ may have already signed up 19 million households, according to data from BMO Equity Research.
Analysts conducted a survey, finding that 16% of the more than 1,000 U.S. shoppers polled were already members of Walmart+, “suggesting an incredibly rapid pace of initial sign-ups for the new membership program.”
Walmart is scheduled to report fiscal third-quarter 2021 results on Tuesday morning.
“We see this as a key positive for potential catalyst for valuation expansion as the company pivots to a recurring revenue model,” analysts led by Kelly Bania wrote.
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Walmart confirmed that it would be launching a membership program in February, but didn’t launch the service until Sept. 1.
Walmart+ costs $12.95 per month, or $98 per year, and the
key offering is unlimited delivery.
The survey also found that 90% of those who have joined see
the $98 annual price as “a good value.”
“We suspect there is much more to come from Walmart+ in the
form of additional partnerships, special discounts, priority delivery slots and
possibly the removal of the $35 Walmart.com shipping threshold for members (a
key barrier for Walmart.com consumers based on our survey),” BMO said.
BMO rates Walmart stock as outperform with a $160 price target.
A Cowen survey found that Walmart+ already has more than 10
million household members, many of them millennials.
“[A]s Cowen’s recently launched Walmart+ survey suggests, early trends are supportive for long-term growth and multiple expansion as the membership program is capturing younger shoppers,” analysts led by Oliver Chen wrote.
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“We do expect long-term multiple expansion as Walmart+,
marketplace growth, and advertising revenue drive greater online engagement and
profitability.”
Cowen rates Walmart stock outperform with a $160 price
target.
Back in September, UBS analysts forecast Walmart+ would have 10 million members by the end of 2021 and could drive $12 billion in additional sales.
More recently, UBS says the total number of members to date “could be at least 4 million to 5 million” if just 3% of the 140 million shoppers who go to Walmart each week sign up.
“Gradually, this program will support Walmart U.S.
e-commerce growth,” UBS analysts led by Michael Lasser wrote.
UBS rates Walmart shares buy with a $148 price target.
Walmart has an average stock rating of overweight and an average target price of $149.74, according to 33 analysts polled by FactSet.
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Here’s what else to watch for when Walmart reports:
Earnings: The FactSet consensus is for earnings per share of $1.18, up from $1.16 last year.
Estimize, which crowdsources estimates from sell-side and buy-side analysts, hedge-fund managers, executives, academics and others, forecasts EPS of $1.29.
Walmart has beaten the FactSet earnings estimate for all but
one of the last 11 quarters.
Revenue: The FactSet consensus is for revenue of $132.08 billion up from $127.99 billion last year.
Estimize is guiding for revenue of $133.92 billion.
Walmart has beaten the FactSet revenue consensus for half of
the last six quarters.
Stock performance: Walmart stock is up 26.7% for the year to date while the Dow Jones Industrial Average
DJIA,
has gained 3.3% for the period.
Other items:
-BMO’s survey finds that, in addition to grocery, the home and apparel categories are also of high interest, with 58% and 42% of Walmart+ members shopping in those categories, respectively. Analysts were “pleasantly surprised” by the finding as they are higher-margin categories.
“We see this as a major advantage for Walmart relative to pure-play
grocers,” BMO said.
-Walmart has made two announcements in recent days. The retailer launched Walmart Pet Care, a suite of services that includes pet insurance, a pharmacy and access to Rover, an online site for finding pet sitters and dog walkers.
And Walmart announced that it is selling its Argentina business, resulting in a non-cash loss of about $1 billion that will show up in fiscal third-quarter 2021.
And: Amazon shipping costs rose more than $5 billion in the third quarter
-UBS thinks there’s a good chance Walmart has issued guidance for the fiscal fourth quarter now that Kroger Co.
KR,
,
Albertsons Cos. Inc.
ACI,
and Amazon.com Inc.
AMZN,
have done so.
“It’s likely seen a bump in consumables sales
quarter-to-date as consumers begin to prep for another COVID-19 wave in certain
areas,” analysts said. “Meanwhile, we expect a significant portion of its
holiday sales to shift online as retailers deemphasize Black Friday.”
Walmart will be closed on Thanksgiving Day.
-Sam’s Club, Walmart’s warehouse retailer, has seen a
traffic increase of 3.5% over the past six months, according to data provided
by Placer.ai. This “has improved its position within the wider wholesale club
sector,” said Ethan Chernofsky, vice president at Placer.ai, in a recent
report.
“And this period ended with October visits up 7.5% heading
into a holiday season that could prove to be a boon for the wholesale club
space.”