Wolfe Research analyst Spencer Hanus reiterated an Outperform rating and $170.00 price target on Walmart (NYSE: WMT) after the company reported soft 1Q results on weak margins with management lowering 2022 guidance. While the top-line momentum (+3.0% US comps vs. consensus at +1.9%) suggests the consumer is holding up in spite of supply chain, labor and mix all offset the top line beat.

The analyst stated "We do expect WMT to improve flow through in the 2H, but the business is proving tougher to pivot as the cost environment becomes increasingly volatile. While the performance surprised investors and the Street we do think that the team should be able to eliminate most of the costs that contributed to the 1Q miss. The stock has also materially outperformed heading into the print with the stock up +2% YTD vs. the market down mid-teens so expectations were high."

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Shares of Walmart closed at $131.35 yesterday.