UPDATE: UBS Upgraded Kohl's on New Strategy
In a report published Monday, UBS analyst Michael Binetti upgraded Kohl's Corp. (NYSE: KSS) from Neutral to Buy and raised the price target from $54 to $69.
Binetti noted that UBS had concerns regarding Kohl's merchandise and inventory strategy since its initiation in April 2012. The analyst commented, "the company's new strategy is a much better, multifaceted strategy with clearly defined programs to target each of the major challenges of the business (compared to a rather blunt strategy last year to build inventories full of low-impact merchandise, assuming high inventories would drive traffic/transactions)."
UBS reported that Kohl's new strategy should drive a consistent +3.5 percent EBIT growth over the next two years. The analyst updated its 2015 EPS estimate to $4.80 versus the street's $4.60. Binetti forecasted a 2015 EPS estimate of $5.30 and possible $6.00 EPS in 2015.
The analyst further commented that "1) Re-Emphasizing National Brands vs Private Brands; 2) Driving Loyalty with Non-Credit Card Customers; and 3) Improving Penetration in Key Traffic Driver Categories (cosmetics, accessories)," will help drive a consistent SSS growth in FY14.
Kohl's closed at $56.85 on Friday.
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.