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Nordstrom (NYSE:JWN) traded slightly lower in early action on Thursday after Jefferies lowered its rating to Hold from Buy.
Analyst Ashley Helgans and team view the current valuation on Nordstrom (JWN) as fair given the current trajectory and extra time needed to restore the pre-pandemic algorithm. Helgans noted that relative volatility also continues to weigh on Nordstrom (JWN) sentiment, which is anticipated to take time to improve. While the firm is encouraged that Rack's revenue has accelerated and sees the potential for more momentum, negative factors called out included a lack of margin recovery, a lagging performance by Nordstrom-branded stores, and inconsistent execution.
Jefferies still has a relatively positive view on the long-term track for Nordstrom (JWN).
"The company has seen challenges with inventory management and Nordstrom Rack since the pandemic, which have weighed on shares. Looking longer-term, we are intrigued by JWN's recasting of its model to balance physical/digital with higher contribution from new/alt rev streams, localize trade areas to improve cost efficiency & customer experience, and more aggressively pursue growth in Rack. Exposure to higher-income consumers should provide support during an economic downturn, but Nordstrom sales have remained challenged."
Jefferies assigned a lowered price target of $17 to JWN.
Shares of Nordstrom (JWN) were down 1.19% at 10:10 a.m. on Thursday.