Walmart's drive to increase profits from its fast-growing online business and advertising could boost the company's revenue over the next five years.

Walmart's US e-commerce division is still unprofitable, but warehouse automation and tighter delivery routes could make it profitable by the end of the decade. This shift can significantly increase the margin of the company's largest market.

"According to our estimates, the EBIT margin of WMT US e-commerce is -6.7% at full load and without subsidies. Thanks to the automation of order fulfillment and the consolidation of delivery routes, we see a path to profitability without subsidies by FY 2030," Bernstein analysts said.

Advertising is another possibility. Walmart's media business, which allows brands to pay to reach shoppers on its platforms, is small compared to Amazon's.

Today, advertising accounts for about 3% of the cost of goods sold through the American sites of Walmart, while at Amazon this indicator is closer to 7%.

If Walmart can increase the share of advertising sales to 5%, and online sales double to more than $200 billion, advertising revenue can grow from $3 billion to $10 billion, which will provide further growth in margins, according to Bernstein.

Combined, improvements in e-commerce and retail media could lift profit margins in the US to around 7%.

This will add more than a dollar per share to earnings within five years, according to analysts.

Walmart also has large investments in India through Flipkart and PhonePe. Both businesses are close to breaking even, but if they go public, Walmart could unlock value by selling part of its stake and using the proceeds to buy back shares. This can give a small increase in profit.

Based on these assumptions, Bernstein sees Walmart shares trading at a multiple of roughly 22-25 to earnings, which is below their long-term average.

The broker set a target price of $117 and gave the stock an "Outperform" rating.