Market Overview

Buckingham Cuts Targets On Dillards, Gap, Nordstrom, Macy's, Raises Target On Kohl's

Share:
  • While Kohl's Corporation (NYSE: KSS) shares are up 4 percent since December 7, shares of Dillard's, Inc. (NYSE: DDS), Gap Inc (NYSE: GPS), Nordstrom, Inc. (NYSE: JWN), and Macy's, Inc. (NYSE: M) are down.
  • Buckingham Research Group’s analysts maintained Neutral ratings for Kohl's, Dillard's, Gap and Nordstrom, and a Buy rating for Macy's.
  • The analyst revised the price targets and EPS estimates for the companies ahead of their 4Q15 earnings.

Kohl's

The price target for the company has been raised from $48 to $52, implying about 9 percent upside. The EPS estimate for 2015 has been raised from $4.32 to $4.40.

Analyst David Glick wrote, “We believe KSS could positively surprise investors, which are very skeptical of their ability to hit their 4Q 2-3% comp guidance.”

Following store and vendor checks, the analyst raised the comp estimate to 2 percent and EPS to $1.95, versus consensus expectation of an EPS of $1.89. the company’s business has been impacted to a certain expect by unseasonably warm weather, which could limit expansion in GMs.

“However, we believe a combination of the relative strength of the middle income consumer, the positive impact of KSS's beauty/loyalty/ecommerce strategies, and some of its merchandise bets (e.g., distorting active) could pay off and positively surprise investors,” the report stated.

Dillard's

The price target for the company has been lowered from $76 to $72, implying about 10 percent upside. The EPS estimate for 2015 has been reduced from $6.88 to $6.73.

Glick expects Dillard's 4Q15 earnings to underperform due to “unseasonably warm weather, the slowing economy in oil patch states, a slowing accessories business, and an underdeveloped ecommerce business.”

Channel checks indicate a continued difficult selling environment in the upper middle to higher income demographic. There are limited levers for Dillard's to lower expenses or to drive more traffic to its stores, given their non-promotional strategy, the analyst commented.

Macy's

The price target for the company has been reduced from $55 to $52, implying about 49 percent upside. The EPS estimate for 2015 has been reduced from $4.20 to $4.10.

While Macy's recent operating results have been disappointing and the company could continue to face top-line and margin pressure in the near term, Glick believes there is “significant long-term value” in its shares. The analyst pointed out that the challenges are transitory and that investors seem to be underappreciating Macy's potential to rekindle free cash flow in FY16.

“We also believe investors are putting little value on M's strategic $500M cost savings program over the next 3 years and remind investors that M should continue its pace of significant share repurchases,” the report noted.

Nordstrom

The price target for the company has been reduced from $55 to $52, implying about 2 percent upside. The EPS estimate for 2015 has been reduced from $3.49 to $3.38.

“While we continue to have very high regard for JWN’s business model and management, it remains our near-term view that shares could be viewed as a source of funds as it appears that retailers focused on the higher-end consumer continue to struggle,” Glick mentioned.

Store visits and channel checks indicate continued pressure on Nordstrom’s GMs, with elevated inventories and markdown activity. While EPS growth is expected to be muted to the low-to-mid-single-digit range in FY16, there is lack of visibility into when sales and margin trends might improve, the analyst said.

Gap

The price target for the company has been lowered from $25 to $23, implying roughly 9 percent downside. The EPS estimate for 2015 has been reduced from $2.41 to $2.36.

Store visits indicate increasing inventory issues at Old Navy, which could weigh on Gap’s results through 1H16. Moreover, the company faces increasing competitive pressure, analyst Kelly Halso stated.

Latest Ratings for KSS

DateFirmActionFromTo
Dec 2020Deutsche BankUpgradesHoldBuy
Nov 2020Morgan StanleyMaintainsUnderweight
Nov 2020Credit SuisseMaintainsNeutral

View More Analyst Ratings for KSS
View the Latest Analyst Ratings

 

Related Articles (DDS + KSS)

View Comments and Join the Discussion!

Posted-In: Buckingham Research Group David GlickAnalyst Color Long Ideas Price Target Reiteration Analyst Ratings Trading Ideas

Latest Ratings

StockFirmActionPT
JNJCantor FitzgeraldMaintains200.0
PCTYJMP SecuritiesMaintains220.0
ADIBarclaysMaintains170.0
AMATBarclaysMaintains115.0
KMBRBC CapitalMaintains147.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com