I'm staying out of retail, at least until after next Fed meeting.
Citigroup’s Paul Lejuez reiterated a Sell rating and shaved $5 off his price target, to $15, writing that there was “no hiding the weak bottom-line results.” He expects profit declines to continue “for the foreseeable future” hurt by tariff concerns and the fact that there’s “no end in sight to store traffic pressures,” a prediction even more troubling given that the struggles at Macy’s come amid a strong economic backdrop.
Cowen & Co.’s Oliver Chen reiterated a Market Perform rating and cut his price target by $4 to $18. He admits the stock seems cheap but expects it to remain depressed “given significant macro uncertainty (particularly in relation to tariffs) and investor skepticism in Macy's ability to improve its gross margin performance. Our fear is that earnings may need to be revised lower than lowered guidance and tariff related overhang will persist for a while.”
UBS’s Jay Sole kept a Neutral rating on Macy’s while cutting his price target by $5 to $16. He admits that while it may be tempting to buy into the stock while its valuation is near a 20-year low, “[i]n the current market environment, bad news is still making stocks fall, even if they look cheap.” He says the stock’s discount “is warranted because this current confluence of macro headwinds is essentially unprecedented.”
Looking ahead. There’s not much Macy’s can do about tariffs, slower tourist traffic (hitting its flagship New York store), and a dip in apparel and footwear spending. Yet investors seem to have little patience with the stock as the company works through these issues, and the most recent results haven’t done the company any favors in that regard.