Jefferies raised its price target on Macy’s stock.
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Shares of Macy’s have more than doubled in the past year, but Jefferies argues that the department store’s stock can rack up more gains.
Analyst Stephanie Wissink reiterated a Buy rating on Macy’s (ticker: M) shares Friday, while raising her price target to $20 from $18.50.
The move comes upon further review of company’s better-than-expected fiscal fourth quarter, which she writes delivered “performance [that] was remarkably consistent—not a laggard.” While she had been concerned that store closures would impair the company’s market share, she is now more optimistic about Macy’s 2021 prospects, given positive feedback from vendors.
With a core base of a slightly older shoppers who are likely to get vaccinated earlier, she writes that near-term traffic trends could also surprise on the upside. Yet Macy’s isn’t just resting on its laurels; Wissink applauds the company’s improving digital content while increasingly using stores to fulfill online orders in a more efficient way. “The ability to broadcast interactive media in a way that inspires click to convert is compelling,” she writes.
The company is closing underperforming stores—one silver lining to the pandemic’s disruption—and that will allow its remaining fleet’s potential to become clearer, she notes. While mall traffic may remain depressed even after the threat of Covid-19 recedes, at least the vast majority of Macy’s stores—some 85%—are in higher-tier malls which should soften the blow of that trend. She is also intrigued by the company’s increasing off-price business.
Macy’s stock edged down 0.1% in recent trading to $17.04. The shares have soared more than 112% in the past 12 months, and are up 51.6% since the start of the year.
Wissink is also upbeat about department store peer Nordstrom (JWN). She initiated coverage of the shares with a Buy rating today.
Write to Teresa Rivas at [email protected]
