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Walmart slashed its second-quarter and 2023 profit forecasts

Walmart Inc (NYSE:WMT) is down 8.7% at $120.55 at last check, after the retail giant yesterday cut its second-quarter and 2023 profit forecasts. The company noted that high food and fuel inflation has led to a drop in consumer spending, with general merchandise expected to suffer as habits change.

The equity has received at least 16 price-target cuts after issuing this warning, with Truist Securities lowering its price objective to $117 from $139. Analysts are still optimistic towards WMT, with 17 of the 23 in coverage carrying a “buy” or better rating, while the 12-month consensus target price of  $145.10 is a 9.9% premium to last night’s close. This means additional price-target cuts and/or downgrades could be on the horizon. 

Prior to today’s bear gap, the security had been attempting a second rally off its May 20, two-year low of $117.28, after the first one lost steam at the $130 level. The $134 region last week rejected the shares, though, which have today slipped back below the 60-day moving average. Year-to-date, Walmart stock is down 8.8%.

Despite calls still outnumbering puts on an absolute basis, the equity’s 10-day put/call volume ratio of 0.79 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is in the elevated 96th percentile of its annual range. This suggests a very healthy appetite for puts of late.

It’s also worth noting the security’s Schaeffer’s Volatility Scorecard (SVS) sits at a 95 out of 100. This means WMT has exceeded option traders’ volatility expectations during the past year.


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By admin