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Nordstrom Troubles Are Priced In At This Point; JPMorgan Upgrades Stock

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Nordstrom Troubles Are Priced In At This Point; JPMorgan Upgrades Stock
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2017 wasn't doom and gloom for the entire retail and department sector and some Wall Street analysts are ready to become less bearish on underperforming names like Nordstrom, Inc. (NYSE: JWN).

The Analyst

JPMorgan's Matthew Boss upgraded Nordstrom's stock from Underweight to Neutral with a price target boosted from $33 to $50.

The Thesis

Dating back to Boss' visit with Nordstrom's management team in December 2016, the stock has underperformed the S&P 500 index by 40 percent, the analyst said in a note. But now a bearish stance no longer applies and many of the cautious multi-year fundamental views are priced in to the stock.

Meanwhile, Nordstrom boasts four key points which point towards a better outlook, including:

  • A differentiated retail profile through a focus on services, store experiences, and technology;
  • Wall Street's low top-line bar appears to be achievable as the company is set to cycle the model's easiest two-year stacks in some time and recent checks hints that fourth quarter same-store sales matched or even exceeded the Street's estimates;
  • Margins are poised for a rebound after being cut in half over the past five years; and
  • President Donald Trump's corporate tax reform could give Nordstrom a 30 percent lift to its fiscal 2018 free cash flow.

Price Action

Shares of Nordstrom gained more than 4 percent to $49.41 on Tuesday.

Image Credit: GoToVan - https://www.flickr.com/photos/gotovan/20954878464, CC BY 2.0, via Wikimedia Commons

Latest Ratings for JWN

DateFirmActionFromTo
Jan 2018JP MorganUpgradesUnderweightNeutral
Nov 2017Morgan StanleyMaintainsUnderweight
Nov 2017BMO CapitalMaintainsMarket Perform

View More Analyst Ratings for JWN
View the Latest Analyst Ratings

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