Stock falls with guidance below expectations. (0:15) OpenAI hits 400 million weekly users. (3:41) Amazon will deliver the next Bond film. (4:11)Show NotesWedbush's Ives defends PalantirAlibaba jumps after resultsEpisode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Full Episode
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Thursday, February 20th, and I'm your host, Kim Kahn. Our top story so far. Walmart's future guidance is spooking investors and shares are sharply lower.
While Q4 results topped analysts' expectations, Outlook, quote, assumes a generally stable consumer and continued pressure from its mix of products and formats globally. The expectation for Q1 sales to be up 3% to 4% should result in EPS between $0.57 and $0.58, and That's down 3-4 cents from a year ago and below the consensus estimate of $65.
For full fiscal year 2026, Walmart also expects sales to improve 3-4%, translating to $698.1 billion at the midpoint with EPS between $250 and $260. This is also less than Wall Street's expectations for EPS of $276 on $705.14 billion in sales. Shares did come off their lows, however, during the earnings call, where CEO Doug McMillan said, The sell side also offered support.
Jefferies analyst Corey Tarlow said, Morgan Stanley's Simeon Gutman said, Street estimates are likely to be revised down this morning. Similar to fiscal year 2025, we would expect a path of outperformance in fiscal year 2026 and ultimate EPS power exceeding the initial outlook. Walmart also raised its dividend by 13% to $0.235 per share.
Among other active stocks, you heard on Wall Street Breakfast about Palantir's dive in the previous session on potential defense spending cuts, and the stock is sinking again today. Shares are currently down 20% from Tuesday's close.
But Wedbush analyst Dan Ives came to the company's defense, saying, "...the bears, which have hated Palantir from $12 to $120 in the last 18 months, now have found their latest silver bullet negative thesis around Palantir being exposed to these budget cuts."
This is exactly the opposite of how we believe these DoD cuts will play out, as in our view, Palantir's unique software approach will enable the company to gain more IT budget dollars at the Pentagon, not less. And Alibaba is up sharply after topping quarterly consensus numbers. Key takeaways included the beats on revenue, adjusted EBITDA, and cloud intelligence segment sales.
Morgan Stanley said the earnings report strengthened its investment thesis as it made modest upward revisions to its EPS estimates following the print. Meanwhile, Jeffries highlighted that the Alibaba International Digital Commerce Group revenue rose 32% year-over-year to smash expectations.
On the economic front, initial jobless claims rose by 5,000 to 219,000 for the week, a little more than expected. The federal government's campaign to cut costs on fire workers doesn't appear to be affecting D.C. area claims so far. About 20% of federal workers live in the metro area.
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