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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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Image and article originally from www.benzinga.com. Read the original article here.