Macy’s Hold Rating: A Balanced Outlook Amidst Retail Sector Uncertainty

In a report released yesterday, Alexandra Straton from Morgan Stanley maintained a Hold rating on Macy’s (M – Research Report), with a price target of $19.00.

Alexandra Straton’s rating is based on a nuanced view of the current retail landscape and Macy’s position within it. Despite fears of a demand slowdown in the softlines sector, Straton notes that first-quarter sales forecasts for many companies appear achievable, indicating that the market may be overly pessimistic. Additionally, Straton anticipates another quarter of broad earnings per share (EPS) upside with little risk to fiscal year 2024 guidance reductions based on first-quarter performance. This suggests that while there are concerns, the actual financial outcomes might be more positive than what is currently expected by the market.

However, the Hold rating also acknowledges potential challenges, including the fact that early April data showed some deterioration in demand, which has contributed to broad-based stock pressure. Despite this, there was some improvement in the third week of April, leaving room for companies to potentially report better exit rates. Straton’s report underscores that while there is a chance for a positive surprise in sales results and exit rate commentary, the overall sentiment remains cautious. This balanced perspective on risk and potential reward, with a focus on the near-term (N-T) outlook, is the basis for Straton’s decision to assign a Hold rating to Macy’s stock.

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Macy’s (M) Company Description:

Macy’s, Inc. engages in the retail of apparel, accessories, cosmetics, home furnishings, and other consumer goods. Its brands include Macy’s, Bloomingdale’s, and Bluemercury. It offers men’s, women’s, and children’s apparel, women’s accessories, intimate apparel, shoes, cosmetics, fragrances, as well as home and miscellaneous products. The company was founded by Rowland Hussey Macy Sr. on March 6, 1929 and is headquartered in Cincinnati, OH.