Investig.com -- Walmart shares fell after the retail giant posted first-quarter results that largely met expectations but failed to deliver the kind of upside investors had grown accustomed to over the past two years. Despite the muted reaction, analysts at D.A. Davidson reiterated a “Buy” rating and maintained a $150 price target, arguing that Walmart’s long-term growth drivers remain firmly intact.

Walmart reported U.S. comparable sales growth of 4.1% excluding fuel, matching consensus estimates but marking the slowest pace in eight quarters. Adjusted operating income came in slightly below Wall Street expectations at $7.67 billion, while adjusted earnings per share of $0.66 were in line with forecasts.

According to experts, investors were disappointed because Walmart’s guidance merely reiterated previous forecasts rather than raising them, a notable concern for a stock trading at more than 40 times forward earnings after years of strong outperformance.

Still, D.A. Davidson argued the underlying business trends remain strong. Walmart continued gaining market share in both grocery and general merchandise, with customer traffic rising 3% — the company’s strongest increase since late 2024. Grocery sales posted mid-single-digit growth, while general merchandise sales improved significantly, helped by strength in fashion.

The report also highlighted accelerating growth in Walmart’s higher-margin businesses, which analysts described as critical to the company’s profit expansion strategy.

Walmart’s online marketplace sales surged 50% year over year, driving a 26% increase in e-commerce revenue and marking the ninth consecutive quarter of more than 20% online growth. Membership income rose 17.4%, supported by continued gains in Walmart Plus subscriptions and Sam’s Club memberships. Advertising revenue climbed 37%, further boosting profitability from Walmart’s digital ecosystem.

The analysts said these businesses — marketplace, memberships, and advertising — are increasingly important because they generate higher margins than Walmart’s traditional retail operations. They estimate these segments now contribute roughly one-third of total profits.

For the second quarter, Walmart guided for sales growth of 4% to 5% in constant currency and operating profit growth of 7% to 10%, while signaling that full-year sales should land at the high end of prior guidance.

D.A. Davidson maintained that Walmart’s long-term “algorithm” of roughly 4% annual revenue growth and 4% to 8% operating profit growth remains intact. Analysts also pointed to the company’s ownership stakes in Flipkart and PhonePe as additional upside catalysts ahead of potential future public listings.