Growth will be hard to come by for Walmart in 2022 as consumer spending loses some of its government support, according to KeyBanc. Analyst Edward Yruma downgraded the stock to sector weight from overweight, saying in a note to clients Wednesday night that the end of federal stimulus could hit Walmart's customer base particularly hard. "Since our initiation, WMT has undergone a transformation into arguably one of the strongest omnichannel U.S. retailers. However, we believe that the lack of stimulus tail winds and continued inflationary pressure may disproportionately impact WMT's 'middle of the middle' U.S. consumer near term," Yruma wrote. Meanwhile, rising wages could pressure Walmart on the cost side of its business. "WMT is also the largest private U.S. employer (2.3M+ employees), and we think wage pressure will continue to intensify," the analyst said. Shares of Walmart have held up better than the broader market in the opening weeks of 2022, but the stock is still down 1% over the past year. Shares fell 0.5% in premarket trading Thursday. KeyBanc did not set a current price target for Walmart. The firm previously had a target of $170 per share, according to FactSet. In the same note, KeyBanc reiterated its overweight rating on Target while upgrading Etsy to overweight from sector weight. —CNBC's Michael Bloom contributed to this report.
A shopper carries a bag outside a Walmart store in San Leandro, California, on Thursday, May 13, 2021.