Macy's (M) PT Raised to $22 at Telsey

Telsey analyst Dana Telsey raised the price target on Macy's (NYSE: M) to $22.00 (from $17.00) while maintaining a Market Perform rating.

The analyst commented: "When we last heard from Macy's, the company had delivered a solid second quarter earnings beat in early-September, with sales, gross margin, and operating expense deleverage all coming in better than consensus expectations. All three name plates turned in positive owned comps for the quarter, led by Bloomingdale's. The company raised its annual outlook by $0.05 (again at the high end) for the year, reflecting a $0.15 increase to expected tariff headwinds for the year. In addition, the outlook for the back half assumes a more choiceful consumer relative to the first half, along with planned actions to strategically capture customer share of wallet while incorporating flexibility to respond to consumer demand and the competitive landscape. The company continues to pursue its Bold New Chapter strategy, which includes closing 150 underperforming Macy’s stores, expanding the luxury footprint by 20%, and targeting $600MM–$750MM in asset monetization over the next three years. We view these initiatives as a rational repositioning, given the performance divergence across banners. While rightsizing the store base should improve long-term profitability, near-term visibility for sales and profitability growth remains limited amid macro pressure, tariff headwinds, and a competitive and potentially promotional retail landscape. As such, we maintain our Market Perform rating and given our increased estimates, we are raising our price target to $22 from $17. Our new price target assumes a 10.5x multiple on our two-year forward EPS estimate of $2.10, vs. the recent multiple of 10.0x."

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