Walmart's stock price declines due to analyst downgrades and market sell-offs

Investing.com – Walmart (NYSE:WMT) stock fell 3.7% on Thursday, making it one of the worst performers in the Dow Jones Industrial Average, as the retailer faced analyst downgrades amid broader market weakness. The decline comes as concerns over Middle East conflicts push oil prices higher and weigh on consumer staples stocks.

Erste Group analyst Hans Engel downgraded Walmart from Buy to Hold, citing valuation concerns despite ongoing growth. He noted that although Walmart increased sales and profits in the fourth quarter, its current expected P/E ratio is well above the industry average.

“The group also increased sales and profits in the fourth quarter. That’s positive. Walmart’s outlook for the current fiscal year is about +4% sales growth and about +7% operating profit growth. Earnings per share should be in the range of approximately $2.75 to $2.85. So, moderate growth will continue. However, the current valuation is significantly higher than the industry average. Therefore, we do not expect this stock to outperform the sector index in the medium term,” Engel commented.

On Thursday afternoon, as Middle East conflicts entered their sixth day, broader market sell-offs continued, raising concerns about inflation and whether the Federal Reserve will cut interest rates. The S&P 500 Consumer Staples Index hit its worst intraday performance since April 21, dropping as much as 2.2%. Other notable declines in the sector included Dollar General, Philip Morris, Costco, and Procter & Gamble.

The Dow Jones Industrial Average declined over 2% during trading hours.

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