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Nordstrom stock target raised, keeps Underperform rating on continued risks

EditorAhmed Abdulazez Abdulkadir
Published 2024/05/31, 12:34

On Friday, BofA Securities adjusted its outlook on Nordstrom (NYSE:JWN), increasing the price target to $18 from $15, while keeping an Underperform rating on the stock. The revision reflects a valuation based on peer comparison and a shift in the valuation year.

The firm's analyst cited ongoing concerns for the department store industry, which influenced the decision to maintain the lower rating. Nordstrom's recent earnings report showed a first-quarter EPS of $(0.24), which fell short of both the firm's $(0.10) and consensus estimates of $(0.08). This shortfall was attributed to a lower gross margin, partly due to timing, and increased SG&A expenses, despite stronger sales.

Management at Nordstrom reaffirmed its full-year 2024 guidance, anticipating total sales to range from a 2% decline to a 1% increase, with EPS projections between $1.65 and $2.05. BofA Securities is holding to its forecasted 2024 EPS for Nordstrom at $1.75.

The new price objective of $18 is based on a 4.5 times forward-looking EV/EBITDA multiple for fiscal 2025, an increase from the previous 4 times fiscal 2024 EV/EBITDA multiple. This adjustment aligns Nordstrom's valuation more closely with its industry peers and accounts for the transition to the next fiscal year in the evaluation.

InvestingPro Insights

As Nordstrom (NYSE:JWN) navigates the competitive department store landscape, real-time data from InvestingPro provides a snapshot of its financial health and market performance. With a market capitalization of $3.43 billion and a notable price uptick over the last six months, Nordstrom's stock movements have been marked by volatility. The company's Price / Book ratio stands at 4.05 as of the last twelve months ending Q4 2024, indicating a high valuation compared to its book value. Despite a slight decline in revenue growth of -5.39% during the same period, analysts remain optimistic, predicting profitability for the year ahead.

InvestingPro Tips suggest that investors should be aware of Nordstrom's current trading at a high Price / Book multiple, which may influence valuation perspectives. Additionally, the company has been profitable over the last twelve months, which could provide a grounding factor amidst the stock's volatility. For more in-depth analysis and additional tips, consider exploring InvestingPro's full suite of tools and insights at https://www.investing.com/pro/JWN. There are 5 more InvestingPro Tips available, which can be accessed with an exclusive 10% discount on a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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