BB&T Capital upgraded Caleres (NYSE: CAL) from Hold to Buy with a price target of $26.00 on attractive valuation following Q1 results.

Analyst Corinna Freedman commented, "CAL reported a modest Q1 sales (on the exit of low margin product lines) and EPS miss (on planned investments), though GM surpassed expectations due to expansion in the Brand Portfolio segment. Famous Footwear achieved a +1% comp, though weather contributed to deceleration into Q2, and while QTD comps are currently trending -MSD, this was largely due to the Memorial Day shift. Comps grow meaningfully easier as Q2 progresses, and the break of more seasonal weather in the Northeast is likely to further support comp improvement. Overall, we are incrementally more positive on the shares given the reiteration of FY guidance, continued athletic expansion, meaningful share repurchase, clean inventory position, progress achieved on supply chain initiatives and the conservatism that we believe is baked into the H2 outlook. At 9x our fiscal 2017 EPS estimate, we believe the shares are oversold; we are raising our rating to Buy from Hold and establish a $26 price target."

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Shares of Caleres closed at $21.72 yesterday.