BofA Securities analyst Lorraine Hutchinson lowered the price target on Macy's (NYSE: M) to $4.50 (from $5.00) while maintaining a Underperform rating, citing weak credit, a lower capex, which was reduced by around $550M, and an expected slow recovery due to how low sales and EBIT are percentage-wise.

The analyst stated "1Q’s preannounced sales and operating income weakness wasn’t a surprise, but the path to recovery laid out by mgmt was disappointing, as are early signs of credit income deterioration (66% of F19 EBIT before asset gains). 1Q preliminary results include sales -45%, a $1bn EBIT loss and $660mn use of cash. We were modeling sales -51%, a $915mn EBIT loss and only a $174mn cash use. Re-opened stores are running at 50% of LY’s levels, which is better than mgmt. planned, but not as good as peers (KSS at 50- 60%, DDS at 56%). Ecomm has been robust (+80% May-to-date) even in markets where stores have re-opened. We worry M’s sales recovery will be choppy as the company strikes the appropriate balance between investment and strengthening its balance sheet. We’re lowering our PO to $4.50 from $5 on lower estimates. We remain Underperform; we expect depressed valuation as M’s recovery lags and leverage remains elevated."