Nordstrom Inc.'s (JWN) - Get Report rough year has made the stock much more attractive to Morgan Stanley. 

It seems many investors have already done their buying of Nordstrom shares based on Morgan Stnaley's upgrade. The stock was rallying 1.79% to $49.02, making the $50 price target just 1.99% above the current price.

Nordstrom shares have lost more than 1% in the past year. While the stock beat the broader market, it actually underperformed its peers. 

"After underperfoming in 2018, JWN now sits 4% below our $50 price target," wrote a team of Morgan Stanley analysts in a note out Tuesday afternoon. The analysts upgraded the stock to equal-weight from underweight. 

The analysts noted the success Nordstrom's peers have had of late, as Kohl's Corp. (KSS) - Get Report is up 21% in the past year, and Macy's Inc. (M) - Get Report is up 25% in the same span.

But it hasn't completely been a story about earnings for Nordstrom, which saw its stock spike to a one-year high of $67.46 a share in August after it reported stellar earnings and strong online sales. The company's earnings multiple has compressed to a point that makes it fairly attractive to its peers. "Over the course of the year, JWN's multiple shrank 3.8 times turns, from 16.5 times on Dec. 31, 2017 to 12.7 times on Jan. 4, 2019," Morgan Stanley said. These are forward earnings multiples. The analysts said that over the past five years, Nordstrom has traded at a 4.8 times premium against Kohl's and a 6 times premium against Macy's, but the difference in multiples has narrowed. 

Nordstrom now trades at a multiple premium of 1.2 times to Kohl's and 4.6 times premium to Macy's. 

"With valuation washed out, we turn neutral and upgrade our rating to equal-weight from underweight, driven by valuation," the note said. 

Plus, Nordstrom is planning to open a flagship women's store in New York City in the fall of this year, which "could yield four quarters of accelerated revenue growth." Management said the store could be a $700 million revenue opportunity, which represents about 4% to 5% of Nordstrom's full-year 2018 revenue. 

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