02:22 PM EDT, 05/13/2024 (MT Newswires) -- Walmart ( WMT ) likely benefited from same-store sales momentum amid a strong pricing position in the first quarter, Deutsche Bank said in a note emailed Monday ahead of the big box retailer's May 16 print.

The brokerage increased its same-store sales estimate to 3.5% and said the buy-side whisper is between 3% and 4% growth. Deutsche Bank rates the retailer at buy with a $70 price target on the stock, which implies roughly 16% upside, analyst Krisztina Katai wrote.

"Despite a volatile consumer spending backdrop, increased concerns on the health of the low-end consumer, and the relative resiliency of shares of (Walmart ( WMT )), we approach its (first-quarter) print with optimism," she said.

The company's strong pricing position is likely aided by incremental rollback activity while its premium private label push is expected to lead to volume growth and stickiness among higher-income households, according to Deutsche Bank.

The first-quarter performance is projected to show evidence that Walmart's ( WMT ) "recent share gains are sustainable," Katai said. Walmart ( WMT ) in February guided for first-quarter constant-currency sales growth of 4% to 5% and adjusted earnings per share of $0.49 to $0.52 post common stock split. The consensus is for revenue of $158.14 billion and normalized EPS of $0.52, according to a Capital IQ survey.

Deutsche Bank doesn't expect Walmart ( WMT ) to update its full-year guidance until the second-quarter print but believes there's merit for a modest raise. The company's initial guidance was perceived to be conservative, according to the report.

Walmart ( WMT ) guided for fiscal 2025 constant-currency sales growth of 3% to 4% and adjusted EPS of $2.23 to $2.37 post split. Wall Street's modeling for revenue of $670.15 billion and normalized EPS of $2.37 for the ongoing year.

Walmart's ( WMT ) late-April announcement that it will shut all 51 of its health centers will serve as an additional tailwind to the company's profit and loss statement in the second half of the year, according to Katai.

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