Bank of America Securities analyst Lorraine Hutchinson reiterated a Sell rating on Nordstrom (JWN – Research Report) today and set a price target of $15.00.
Lorraine Hutchinson has given her Sell rating due to a combination of factors affecting Nordstrom’s current financial outlook and structural challenges within the broader department store sector. She points to a forecasted decline in revenues, with expectations ranging from a 2% decrease to a marginal 1% increase, including a 135 basis point impact from a previous year’s sales comparison. The anticipated EBIT margin also shows a decrease, which contributes to an expected earnings per share (EPS) drop of about 13% year-over-year, falling below the consensus estimate. Hutchinson also notes that while Nordstrom is making progress with its Rack brand, the mainline department stores continue to face sales declines, further justifying the underperform rating.
Additionally, Nordstrom’s credit card revenue is projected to decrease, which comprises a significant portion of net sales, further pressuring profitability. This is partly due to new regulations on late fees, which are expected to reduce this revenue stream. Although Rack stores are seeing growth and expansion, this positive aspect is not enough to offset the weaknesses in the core Banner sales and the overall challenging environment for department stores. The valuation adjustment to a price objective of $15 reflects an EV/EBITDA multiple expansion, yet it remains below the current stock price, underscoring the rationale behind the Sell recommendation.
See Insiders’ Hot Stocks on TipRanks >>
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
Nordstrom (JWN) Company Description:
Nordstrom, Inc. engages in the manufacture and trade of clothes, shoes and accessories. It operates through the following business segments: Retail, Credit and Corporate/Other. The Retail segment manages physical stores and online shops. The Credit segment offers a range of payment options to customers. The Corporate/Other segment includes sales return reserve, expenses, and assets. The company was founded by John W. Nordstrom in 1901 and is headquartered in Seattle, WA.
Read More on JWN:
- Nordstrom Unveils Q4 Results and 2024 Financial Outlook
- Nordstrom Reports Fourth Quarter 2023 Earnings
- Options Volatility and Implied Earnings Moves Today, March 05, 2024
- Nordstrom Board Approves Dividend, Reflecting Strategic Confidence
- Options Volatility and Implied Earnings Moves This Week, March 04 – March 07, 2024
