RBC: 'Everyone who was going to shop at Walmart already shops at Walmart'

Walmart reported better-than-expected earnings on Thursday, with comparable-store sales up 1.8% over the previous year, making for a 12th straight quarter of positive results.

Merchandise volumes - fueled by its $3.3 billion jet.com acquisition a year ago - were also up 67% over the previous year.

But analysts at RBC Capital Markets aren't convinced that the retail giant can continue to grow.

"Walmart's productivity loop-operate for less, buy for less, sell for less, and grow sales-has been a very successful and powerful tool for the company, helping to create the biggest retailer on the planet," they wrote in a note sent to clients Friday.

"However, we believe that due to its already immense market share and the likelihood that everyone who was going to shop at Walmart already shops at Walmart, the company's productivity loop has entered the phase of diminishing returns."

RBC maintains its "underperform" rating for Walmart's stock, which is up about 22% since January. Its price target of $77 is just below where Walmart is trading now.

"Through store improvements and e-commerce growth, Walmart has maintained solid traffic and comp trends despite a difficult retail environment. E-commerce growth has been impressive (+60%), but boosted by SKU additions, which will moderate at some point," writes the bank.

"Finally, profit growth remains elusive due to investment spending and competitive pressures, which will likely limit further upside in WMT shares.

Other investors on Wall Street appeared to share RBC's interpretation of Walmart's earnings.

Despite topping Wall Street estimates, shares of Walmart fell about 2.5% when markets opened Thursday, before regaining some ground and closing at $79.70 Thursday.

Shares were trading at $79.88 at midday in New York, just a hair higher than the opening price.