Lofty near-term profit expectations are a headwind for Walmart , and could lead to disappointment for investors, according to Oppenheimer. The investment bank downgraded the nation's largest retailer to perform from outperform, and removed its prior $140 price target on the stock, which implied 26% upside from Monday's close. There are three reasons to be less bullish on Walmart, analyst Rupesh Parikh wrote in a 40-page report Tuesday: "1) top-line pharmacy headwinds in the Walmart U.S. business, which we believe could drive a comp shortfall vs. Street forecasts in Q2 and later in the year primarily impacted by the [Inflation Reduction Act] 2) a peakish valuation that could be more susceptible to a re-rating lower if Walmart U.S. comp growth slows from 4%+ to the 2.5-3.5% range; and 3) Street forecasts already model well ahead of longer-term guidance leaving less room for upside," Parikh said. Oppenheimer's own outlook for Walmart's earnings this year haven't changed, pegging 2026 profits at $2.81 per share, up from $2.64 in 2025, and $3.10 in 2027. Parikh still thinks Walmart can hit its guidance for both sales and earnings in full-year 2026, as well as meet its long-term targets. The new rating leaves Oppenheimer as an outlier on Wall Street, where only four analysts out of 44 have hold ratings on Walmart and none carry sell or underperform ratings, according to LSEG. But heading into its fiscal second-quarter earnings report on August 20, Oppenheimer expects that shares might move lower in reaction to the results, as valuation peaks. The stock is trading at 37 times forward earnings, while historically that level is closer to 23 times, Parikh wrote. The analyst also noted the changed outlook is only temporary, as Oppenheimer remains long-term bullish on Walmart. "Although we are moving to the sidelines due to what we view as a less attractive risk/reward scenario, we continue to look very favorably upon WMT's longer-term prospects and management team," Parikh wrote. "We believe the company's longer-term algorithm is still realistic and remain confident in management's efforts under President and CEO John Furner to drive [market] share gains over time." WMT YTD mountain Walmart year-to-date.