UPDATE: Morgan Stanley Downgrades Saks Incorporated to Underweight; Valuation Appears Rich

Morgan Stanley downgraded Saks Incorporated

from Equal-weight to Underweight and announced a $10.00 price target. Morgan Stanley noted, "We lower our ‘13 outlook on higher SG&A driven by omnichannel growth and spending. … SKS trades at 7.1x FY14 EBITDA, roughly in line with its 7.3x post-recession average, but significantly above recent levels. SKS valuation is also ~1.5 turns above the ~5.6x dept. store peer avg. We do not believe SKS' fundamentals support this premium and view the risk-reward as unattractive given a 5:1 skew towards the downside." Saks Incorporated closed at $11.35 on Wednesday.