Macy's (M) PT Raised to $32 at Cowen, Standalone Ecomm Biz Could Be Worth $40!

Cowen analyst Oliver Chen raised the price target on Macy's (NYSE: M) to $32.00 (from $27.00) but believes a near-term spinoff is unlikely. That said, the standalone e-comm business could impressively carry over an $11.5bn enterprise value, or as much as $40/share if investors place a 1.1x normalized for growth EV/sales multiple on the FY23 e-comm revenues.

The analyst reiterated an Outperform rating, stating "Cowen’s comparable e-comm valuation analysis indicates M spinning out its e-comm business on paper could unlock significant value. For example, if we apply a 1.0x sales multiple to the e-comm business on FY23, this yields a market cap of $10.9bn vs. M's current overall low 8x P/E on $8.2bn of market capitalization, 5x EV/EBITDA, and 0.5x EV/sales multiples (all FY3). We believe a spinoff could be possible, and management and the board have and are analyzing this possibility along with other value generating initiatives. However, we acknowledge that there have not been many successful long-term proof points, and there are significant risks to destabilizing the business and slowing momentum."

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