Analyst Oliver Chen of TD Cowen maintained a Hold rating on Macy’s (M – Research Report), reducing the price target to $14.00.
Oliver Chen has given his Hold rating due to a combination of factors influencing Macy’s current and future performance. The company’s recent earnings per share exceeded expectations, primarily due to one-time adjustments, but there was a slight miss in owned comparable sales. While there are positive signs such as improved operating leverage and slightly better gross margin and SG&A performance compared to the market, the overall outlook remains cautious.
Chen notes that Macy’s is making prudent modernization efforts, which include additional staffing and updates to products, stores, and marketing. However, these efforts are counterbalanced by the need for promotional activities to drive customer traffic and conversion. The company’s guidance for the first quarter of FY25 is conservative, reflecting macroeconomic uncertainties such as inflation and housing costs. Despite strong performance from luxury banners and a solid free cash flow position, the inventory levels have increased, which may pose challenges. Given these mixed signals and the cautious guidance, Chen has adjusted the price target to $14 and maintains a Hold rating as he continues to monitor the company’s progress.
In another report released yesterday, CFRA also maintained a Hold rating on the stock with a $13.00 price target.