Walmart (WMT.US) Q2 sales growth in the US falls short of expectations, but several Wall Street institutions remain optimistic. Jefferies: Core business trends remain solid.

According to information from Zhihu Finance APP, on Thursday, Walmart (WMT.US) shares plunged over 9%. The company's second-quarter sales growth in the US market fell short of market expectations, and its third-quarter profit guidance was weak, sparking investor concerns about the company's short-term growth prospects. However, several Wall Street institutions, including Jefferies, RBC Capital Markets, UBS, and Evercore ISI, remain optimistic about Walmart. They believe the sales slowdown is mainly due to specific business and macroeconomic factors, and there has been no significant change in the company's market share growth trend.

The financial report shows that same-store sales at Walmart's US operations rose 2.6% year-over-year, below the general market consensus. At the same time, the company's third-quarter profit guidance also disappointed investors.

During the earnings call, Walmart management stated that the company is proactively lowering prices on certain goods in hopes of further expanding its market share. This also means short-term profits may be affected by this pricing investment.

Jefferies analyst Corey Tarlowe pointed out that although Walmart US same-store sales increased by only 2.6%, if health and wellness businesses are excluded, same-store sales rose by 3.4%. The health and wellness segment was dragged down by deflation caused by regulatory controls on maximum fair drug pricing, thus impacting overall sales growth.

Jefferies believes that Walmart's core operations remain solid, transaction volumes continue to rise, the company is expanding market share in multiple categories, and its e-commerce, advertising, third-party platform, and membership businesses are all performing strongly. Therefore, Jefferies maintains its "Buy" rating on Walmart.

RBC Capital Markets analyst Steven Shemesh is also optimistic. He notes that excluding the impact of tariff refunds, Walmart's operating profit still achieved nearly 10% growth. Although investors may question whether the company still deserves a high valuation given the current growth rate of its US operations, RBC believes this mainly reflects the overall macroeconomic environment rather than a slowdown in Walmart’s market share gains.

RBC sees Walmart as having structural competitive advantages compared to other retailers and expects both revenue and profit to have substantial long-term growth potential.

UBS analyst Michael Lasser said this financial report may further spark market debates around Walmart's valuation and growth outlook, but the bank remains bullish on the company.

Evercore ISI continues to maintain its "Outperform" rating. Analyst Greg Melich notes that Walmart’s sales growth actually reached the upper end of its previous guidance range, and the company has now raised its full-year sales growth forecast to between 4.0% and 5.0%.

According to Evercore, the current profit growth trajectory mainly reflects Walmart's proactive pricing investment and market share competition, rather than a significant deterioration in consumer demand. In other words, the company is leveraging its scale and profitability to further strengthen its competitive advantage through price cuts.

While many Wall Street institutions remain positive about Walmart's long-term fundamentals, the weaker-than-expected US sales growth and disappointing third-quarter profit guidance continue to weigh on investors in the short term. The market's next focus will be on whether Walmart’s price-cutting strategy can further boost traffic and market share, and how much this approach will impact profit margins.