Nordstrom (JWN) Stock Surges 10% on Beat-and-raise, Analysts Remain Cautious and Warn Rally May Be Short-lived
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Shares of Nordstrom (NYSE: JWN) are up nearly 10% in premarket trading Wednesday after the luxury department store chain hiked its revenue forecast for this fiscal year.
JWN reported Q1 revenue of $3.57 billion, topping the consensus estimates of $3.28 billion. Adjusted loss per share in Q1 stood at 6c, worse than the analyst estimate of negative $0.05.
For the full fiscal year of 2023, the company expects adjusted EPS in the range of $3.20 to $3.50, up from the previous forecast of $3.15 to $3.50. JWN expects FY2023 revenue growth in the range of +6% to +8%, up from +5% to +7%.
EBIT margin is expected to be between 5.8% and 6.2%, up from the previous guidance of 5.6% to 6%.
Nordstrom’s board also authorized a new share repurchase plan of $500 million.
BMO analyst Simeon Siegel remains cautious on JWN despite a beat and raise quarter.
“Better-than-feared results coupled with management’s optimism lifted shares in after-hours trading; however, we remain concerned that 1Q’s 0.9% EBIT rate remains far from even the low end of the FY expected 5.6-6.0% range, raising concerns that, during a period when most companies are cutting guidance, JWN may have just kicked the can down the road. Shares are "cheap" but we fear numbers are high,” Siegel said in a client note.
UBS analyst Jay Sole reiterated a Sell rating as the Q1 report didn’t yield enough evidence for Sole to change his bearish stance.
“We think any stock pop could be short-lived and continue to rate the stock Sell. We don’t view JWN’s guidance raise as a thesis changer. We note JWN delivered just a 0.9% 1Q22 EBIT margin in what was an exceptional environment for Softline companies focused on higher-income consumers. We think this shows JWN still faces major challenges, and this is what our Sell thesis is based on. Plus, we believe JWN’s guidance assumes the strong higher income consumer spending patterns experienced in Q1 continue over the rest of FY22. We think this is unlikely (link). We expect JWN’s earnings over the NTM to disappoint and this could lead to downward revisions and multiple compression, leading to stock price underperformance,” Sole told clients.
By Senad Karaahmetovic
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