Deutsche Bank Downgrades Nordstrom (JWN) to Hold
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Deutsche Bank downgraded Nordstrom (NYSE: JWN) from Buy to Hold with a price target of $56.00 (from $57.00).
Paul Trussell explained the rating change, saying, "We continue to believe that JWN's business model is unique to dept. stores via its: 1) variable cost structure; 2) limited promotional reliance; 3) more upscale targeted demographic; 4) greater product differentiation; and 5) multi-channel approach (full-line stores, the Rack, and e-commerce). Equally important, JWN remains ahead of the curve on both inventory and Internet technology investment, which has translated into outsized comp growth vs. its peers, and the company has a strong FCF profile despite increased investment spend. In our view, the business has stabilized from a margin standpoint and the Street has yet to realize the inherent EPS improvement ahead by lapping easy margin compares and turning the corner on Canada, HauteLook/Nordstromrack.com, and Trunk Club. However, the top-line is not yet showcasing the signs of reacceleration we think are necessary to maintain a high-teens multiple, and we have moved to the sidelines."
Shares of Nordstrom closed at $52.70 yesterday.
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