Oppenheimer Downgrades Walmart Ahead of Earnings, Cites Pharmacy Concerns

Oppenheimer downgraded Walmart (WMT) to 'Perform' from 'Outperform', citing concerns about its pharmacy operations and a 'peakish valuation' that leaves limited room for upside. The firm sees a 'less compelling outperformance case' for the company in the near term, according to their report.

The downgrading of WMT comes ahead of the consumer retail giant's second-quarter earnings report expected later this month. Oppenheimer pointed to headwinds the company's pharmacy operations face in the U.S., which could drive lower comp sales in Q2 versus consensus estimates.

Oppenheimer believes that if Walmart's U.S. comp growth slows to 2.5-3.5% from 4%, the stock's 'peakish valuation' could be at risk of a re-rating lower.