Walmart (WMT) is expected to see a softer fiscal Q2 as lower-income consumers remain pressured, though easing grocery inflation could support growth ahead, RBC Capital Markets said in a note Wednesday.

Analysts said they met with the company's investor relations team, which said the overall consumer environment remains unchanged, with lower-income shoppers continuing to face financial pressure. Despite this, the discussions reinforced confidence in Walmart's strong long-term competitive position, analysts said.

The investment firm expects fiscal Q2 to be the "low-water mark for the year," although the company's IR team said recent softer sales trends were largely in line with guidance, which called for 4% to 5% fiscal Q2 constant-currency net sales growth, following 5.9% growth in fiscal Q1.

The guidance reflected "the Q1 benefit from tax refunds, the impact of rising gas prices, and a difficult general merchandise inflation compare related to tariff timing," according to the note.

The firm now expects Walmart US fiscal Q2 comparable sales growth at 3.5%, down from 4% previously and below consensus of 3.8%. Adjusted earnings per share estimate for Q2 is unchanged at $0.75, slightly above consensus of $0.74. For fiscal 2027 and 2028, adjusted EPS is forecast at $2.91 and $3.26, respectively, down from $2.92 and $3.27 previously.

RBC Capital Markets has an outperform rating and $137 price target on Walmart.

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