Nordstrom Off-Price, Digital Channels Lift Potential: Telsey

Nordstrom was upgraded at Telsey to outperform from market perform with a $17 price target.
Author:
Publish date:

Nordstrom  (JWN) - Get Report shares jumped Monday after analysts at Telsey upgraded the department-store retailer's stock to outperform from market perform with a $17 price target. 

The Seattle company's shares at last check were up 20% at $15.45. They have traded on Monday up as much as 33% at $17.07. 

Analyst Dana Telsey sees Nordstrom as positioned to gain profitable market share as it is bolstered by a strong balance sheet. 

The factors leading to Telsey's bullish outlook include an off-price channel that has room for growth; a scaling market strategy that integrates physical and digital assets; a profitable and growing digital presence; a streamlined portfolio of full-line stores; and accelerated operational efficiencies. 

Nordstrom shares had fallen 69% in 2020 through the close of Friday's trading. They have lagged the department-store and off-price sectors, which are down about 52% on average. That lagging position makes its positives more appealing, according to Telsey. 

"Nordstrom’s off-price multichannel business consists primarily of 248 Nordstrom Rack stores in the U.S. and Canada (as of second-quarter 2020), the Nordstromrack.com and HauteLook.com websites, and mobile apps," the analyst wrote.

"The channel has increased steadily in the mix of business to reach approximately $5.2 billion in revenue in 2019, or 34% penetration, compared to sub-30% five years ago, and there are legs for further growth."