Morgan Staney Upgrades Brown Shoe Company To Equal Weight

Analysts at Morgan Stanley upgraded Brown Shoe Company BWS on Monday from Underweight to Equal Weight and lowered their price target for the stock from $28.00 to $26.50. Brown Shoe Company produces and sells men’s and women’s shoes.

Potential For Downside

Brown stock is up more than four percent in early trading today on news of the upgrade. The stock is currently trading at about $30.00. Morgan Stanley’s $26.50 price target represents about a 12 percent downside for the stock from current levels. Brown stock has had a decent year in 2014. The stock is up more than six percent year to date.

Other Analyst Action

Morgan Stanley is not the only firm to weigh in on Brown Shoe Company lately. Jefferies Group initiated coverage of Brown this month, issuing a Hold rating and setting a price target for the stock of $32.00. In November, Zacks upgraded Brown from Neutral to Outperform and set a $34.10 target for the stock. Finally, Buckingham Research downgraded Brown in November from Buy to Neutral.

Insider Selling

Back in September of this year, Brown Shoe Company CEO Diane Sullivan sold over $1.1 million of Brown stock at a price of $30.02 per share. Chief Accounting Officer Daniel Karpel and Division President John Mazurk each joined Sullivan in selling about $150,000 worth of Brown stock at around the same time.

A Valuation Perspective

Brown Shoe Company’s price to earnings ratio (P/E) is about 17.5, which is very close to average for the overall S&P 500. It’s forward P/E ratio is a more appealing 15. Brown’s current debt to equity ratio of about 0.4 is reasonable for the footwear and apparel sector.