J.P. Morgan Negative on Department Stores, Prefers Luxury Chains (TGT, M, JCP, KSS, SKS, JWN)
J.P. Morgan is out with a research report this morning, which is quite bearish on the department store names ahead of earnings. The JP Morgan analysts said, “We are lowering our EPS estimates for all five departments stores we cover, along with Target, incorporating both more realistic top-line expectations for the balance of 2010/2011 and our view that gross profit margins next year could fall under some duress from rising foreign sourcing costs.”
The JPM analysts also added, “Importantly, our 2Q10 EPS estimates remain intact across the board; in fact, we are raising estimates for the luxury chains: Nordstrom (NYSE: JWN) and Saks Inc. (NYSE: SKS), which provided stronger-than-expected SSS during May/June."
"Finally, we have adjusted our December 2010 price targets as follows: Target (NYSE: TGT) @ $59, Macy’s (NYSE: M) @ $24, JCPenney (NYSE: JCP) @ $28, Kohl’s (NYSE: KSS) @ $57, Saks @ $10, and Nordstrom @ $37.”
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