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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

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
Nov 2020Credit SuisseMaintainsNeutral
Nov 2020BarclaysMaintainsUnderweight
Nov 2020Telsey Advisory GroupUpgradesMarket PerformOutperform

View More Analyst Ratings for JWN
View the Latest Analyst Ratings

 

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