Story updated at 10:05 a.m. to reflect market activity.
Macy's gained 2.4% to $59.51 in morning trading.
The bank raised its price target for the retailer to $68 from $56. Analyst Paul Lejeuz said Macy's is posting strong sales in a challenging retail environment.
"In what was likely one of the most challenging holiday seasons, M performed very well, posting solid comps (+2.3% including licensed departments) and flat merchandise margin in what was a remarkably promotional season. In our view, Q4 proves that they won the battle of the mid-tier department stores, demonstrating the company has the brands consumers want, has leverage with those brands, and is nimble with promotions," the analyst wrote. "This, in addition to the company's steady and strong FCF and SG&A flexibility, prompt our more positive view on the stock."
Separately, TheStreet Ratings team rates MACY'S INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MACY'S INC (M) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, increase in net income, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 39.48% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, M should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- MACY'S INC has improved earnings per share by 18.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MACY'S INC increased its bottom line by earning $3.90 versus $3.29 in the prior year. This year, the market expects an improvement in earnings ($4.48 versus $3.90).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Multiline Retail industry average, but is less than that of the S&P 500. The net income increased by 11.1% when compared to the same quarter one year prior, going from $730.00 million to $811.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Multiline Retail industry and the overall market, MACY'S INC's return on equity exceeds that of both the industry average and the S&P 500.
- 40.62% is the gross profit margin for MACY'S INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 8.81% is above that of the industry average.
- You can view the full analysis from the report here: M Ratings Report