Macy's (M) Stock Price Target Lowered at BMO Capital Markets
NEW YORK (TheStreet) -- BMOCapitalMarkets lowered its price target on Macy's (M) - Get Report stock to $53 from $70 on Friday morning. The firm maintained its "outperform" rating on the stock.
The Cincinnati-based retailer will face challenges into early 2016 that will hamper same-store sales growth, BMO Capital said.
Macy's, which reported a 3.6% decline in same-store sales earlier this week, has a slow path back to 2% to 3% growth in same-store sales, the firm added.
"We recommend buying M, particularly on weakness, as we don't see strong evidence that management cannot restore sales growth, improve EBIT margin, and surface the value of its real estate portfolio, including paring unproductive assets (35-40 store closings in early 2016) and redeveloping unproductive space," the firm continued.
BMO Capital analysts lowered their 2015 earnings estimate on Macy's to $3.80 per share from $4.17 per share.
Shares of Macy's closed up by 0.01% to $40.83 on Thursday.
Separately, TheStreet Ratings team rates MACY'S INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate MACY'S INC (M) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 significantly exceeds that of both the industry average and the S&P 500.
- 39.79% 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. Regardless of the strong results of the gross profit margin, the net profit margin of 2.00% trails the industry average.
- MACY'S INC's earnings per share declined by 41.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MACY'S INC increased its bottom line by earning $4.27 versus $3.90 in the prior year. This year, the market expects an improvement in earnings ($4.61 versus $4.27).
- The debt-to-equity ratio is very high at 2.01 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.09, which clearly demonstrates the inability to cover short-term cash needs.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Multiline Retail industry. The net income has significantly decreased by 45.6% when compared to the same quarter one year ago, falling from $217.00 million to $118.00 million.
- You can view the full analysis from the report here: M
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.