Walmart's (WMT) Q2 growth could slow down, but it would be mostly due to a function of mix and comparisons rather than any weakening in execution and competitive positioning, UBS said in a research report emailed Tuesday.

The company has a "rare ability" to drive earnings at a double-digit rate for a prolonged time, driven by market share gains, productivity initiatives, and the scaling of higher-margin profit streams, according to the note. The company is due to report Q2 results on Aug. 20.

Walmart is heading into an attractive phase as the benefits from automation and supply chain modernization are driving incremental profit dollars, which can be allocated simultaneously toward shareholder returns and reinvestment, analysts wrote.

Despite pressure on Q2 comp, Walmart's core growth engine is intact as it leverages delivery capabilities to increase grocery share, enhances assortment to attract higher-income shoppers, and expands its third-party marketplace for growth in general merchandise, UBS stated.

The brokerage maintained its buy rating on the stock and price target of $141 per share.

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