Deutsche Bank maintains “buy” rating for Macy's

Deutsche Bank maintains its “buy” rating on Macy's Inc (NYSE: M). The target price for M is set to $19.

Macy's posted its Q3 EPS at -$0.03 ahead of the consensus and the estimates. M’s sales for the quarter fell by 3.9% y/y on a 3.6% decline in comps. Other highlights of the quarter were:

• A 7.4% decline in inventories
• Gross margins rose 71bp y/y vs the estimate for +30bp.
• SG&A margins rose 57bp y/y, marginally less than the estimate of +45bp
• EBIT margins of +14bp

Macy's raised its EPS guidance, ex-items, for FY09 from $0.70-$0.80 to $1.01-$1.06. M’s FQ4 EPS projections for Q4 stand at $1.00-$1.05. Deutsche Bank believes that the guidance, which is short of the consensus, is conservative.