This Luxury Retailer Has Analysts Bullish As GenZ, Millennials Aim To 'Refresh Their Closets'

Zinger Key Points
  • Jefferies upgraded Nordstrom from a Hold rating to Buy and raised the price target to $24 from $21.
  • "Nordstrom is best positioned to capture share of an upcoming wardrobe refresh," Jefferies says.
This Luxury Retailer Has Analysts Bullish As GenZ, Millennials Aim To 'Refresh Their Closets'

Jefferies analysts have turned positive on department stores, but Nordstrom Inc. JWN was the only stock to catch an upgrade from the analyst firm on Thursday. 

What To Know: Jefferies upgraded Nordstrom from a Hold rating to Buy and raised the price target to $24 from $21, noting that the company's higher-income consumer base should help create some stability in the name relative to peers amid economic weakness. 

"We recognize we could be early, but the higher income consumer base is a structural advantage during economic downturns and excess inventory in the industry could benefit Rack merch issues more than expected," Jefferies analysts wrote in a note to clients.

Although the firm lowered its estimates as a result of macro uncertainty, Jefferies has a more positive outlook on the company's profitability than the Street. Jefferies analysts expect revenue growth of 1.3% year-over-year in 2023 and earnings of approximately $2.85 per share.

The firm's $24 price target assumes a price-to-earnings multiple of 8.5. The company is currently trading around 7 times forward earnings, according to Benzinga Pro.

Wardrobe Spending Survey: Jefferies analysts surveyed 850 consumers in an effort to gauge apparel and footwear spending expectations. 

"About 70% of GenZ and Millennial respondents surveyed indicated their wardrobes are out of style and plan to refresh their closets over the next several [months]," the firm said.

Only 30% of respondents over the age of 60 said they planned a wardrobe refresh. Additionally, wealthier respondents plan to spend more on apparel and footwear over the next 6 months, according to the survey.

"Our survey data coupled with our dept. store income/age data reveals Nordstrom is best positioned to capture share of an upcoming wardrobe refresh," Jefferies said. 

JWN Price Action: Nordstrom has a 52-week high of $29.59 and a 52-week low of $16.83.

The stock was up 1.22% at $18.20 Thursday afternoon.

Photo: Bill Holmes from Flickr.

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