Has Macy's Stock Bottomed?

Bearish insights came from analysts about Macy's, Inc. M stock, after the retail department store had been faced with a challenging Q4. Macy's shares closed at $36.15 on Wednesday. Macy's is currently trading at 37.49 on Thursday. The retailer reduced its full year profit forecast to $3.85 to $3.90 per share compared to earlier guidance of $4.20 to $4.30 on Wednesday. The company also announced a major restructuring of its real estate, with its Herald Square location alone, worth close to $4B. Deutsche Bank issued a Hold rating on Macy's with a price target of $43.00 on Wednesday. "Thank goodness Macy's provided Holiday results after the close Wednesday ahead of Thursday's SSS circus," commented analysts at Deutsche Bank (DB) in a research note released on Wednesday. We continue to view the business as challenged with market share losses to peers, off-price, vendors, fast fashion, and online competitors coupled with category, tourism, and overall mall traffic headwinds, DB noted in the research report. Macquarie gave Macy's a rating of "Outperform" and a target price of $36.15. Further stock market pessimism, measured by Macquarie Capital, was based on retailers affected by El Nino's warm season, with 80 percent of the comp decline in November/December due to shortfalls in cold weather goods. Comps in November/December were down 4.7 percent on an owned/licensed basis compared to previous guidance of down 2 percent to 3 percent for 4Q15. Macy's received a Buy rating from Buckingham Research Group, raising their price objective to $52.00, down from their previous price objective of $55.00. The Buckingham Research Group views Macy's Holiday results as a disappointment, however value investors should take interest in the risk/rewards remaining ($56 upside versus $33 downside) at the retailer's present levels. Macy's management believes 2016 will benefit from ~$400M in cost savings and an indicated objective of re-attaining 14 percent EBITDA rate over time. "While we are disappointed with Holiday results (with both sales/GM below our revised expectations) and lowered FY15 EPS guidance (now $3.85-$3.90), we still believe there is LT value in M shares," Buckingham Research Group said in a research note released Thursday. "Secondly, mgmt. hired a real estate investment bank to evaluate potential partnerships/JV across mall based locations and flagships."