UPDATE: Sterne Agee Downgrades Dillard's, Lowers PT to $47
In a published report, Sterne Agee lowers its rating on Dillard's, Inc. (NYSE: DDS) to Neutral and its price target from $58 to $47 as margins are facing pressure and are potentially reverting.
Sterne Agee says it was lowering “‘11E/12E EPS from $4.13/$4.91 to $3.96/$4.52 as margins now appear at risk. DDS entered 4Q with inventory psf +4%, thereby requiring a comp of ~4% to sustain gross margins. This was inherently risky given the more difficult compare (600 bps 1 year, 700 bps 2 year), heightened promotional activity across the space and the prevailing macroeconomic uncertainty. We do not wholly ascribe to the multiyear compare being the sole determinant, but it does appear that soft business has precipitated a meaningfully more promotional stance at Dillard's.”
DDS closed at $49.69 per share, up 2.52 percent, on Monday.
