Dillard's Is A 'Best Idea' For This Analyst

Department store chain Dillard's, Inc. DDS is an attractive story which boasts multiple growth strategies that are likely to translate to higher profits over time, according to Wedbush.

The Analyst

Wedbush's Jen Redding initiated coverage of Dillard's with an Outperform rating and $95 12-month price target. The firm also added Dillard's to its "Wedbush Best Ideas List."

The Thesis

Dillard's management team is overseeing multiple growth initiatives that can not only strengthen the relationship with customers but improve total profitability, Redding said in a note. These include store remodels, new employee incentive programs, improved relations with brands and inventory management across the e-commerce platform.

Management's many initiatives are showing signs of success, including three consecutive quarters of earnings beats, the analyst wrote. The company is scheduled to report its second-quarter results Thursday and the trend is likely to continue based on Wedbush's proprietary tracking of e-commerce data, marketing campaigns and promotional metrics.

The bullish stance on Dillard's can also be made based on the concentrated ownership structure and a high short interest where 23.57 percent of shares outstanding are shorted (as of July 12) with 14.7 days to cover, the analyst wrote.

Price Action

Shares of Dillard's were trading higher by more than 6.8 percent at $87.37.

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