Nordstrom is a new short idea at Hedgeye after skyrocketing on Wednesday

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• Nordstrom Inc. (NYSE:JWN) was added as a new short idea at Hedgeye with the potential for 40% downside for the department store chain over the next 6 to 12 months.
• "We’re adding the short in the wake of the massive squeeze on what we think is a Hail Mary guide by the JWN management team," according to Hedgeye analyst Brian McGough. "We think that by the time management misses its guide 6-12 months out, this name is in the mid-high teens, or 40-50% below today’s rip. We went through our model in detail, and quite frankly struggle to get to over $2 per share in earnings – never mind $3.50."
• Nordstrom (JWN) shares fell 3.3% after skyrocketing 37% on Wednesday after the department store operator easily topped consensus estimates with its Q4 earnings report. Cowen raised its price target on Nordstrom to $30 from $25 off what it called significantly better than anticipated Q4 profit.
• Hedgeye's McGough expects that this year is going to be a painful `mean reversion year' for apparel spending in both units per capital and average price per garment, which will pressure every apparel retailer, especially a department store chain like Nordstrom (JWN).
• Nordstrom (JWN) short interest is 22%.
• Last month, Evercore ISI turned cautious on Nordstrom with downgrade.

Comments

[MR-Tennessee]

Look at Brian’s twitter feed… he was already short the stock before the rally which followed the quarterly results, he admits it in one of his tweets…

[ValueInvestorMM]

Hedgeye, never heard of it. Looked it up, a research firm which earns money from subscription based on their "Hedge fund-quality research". Think about it, if the analysts working there are any good, they would be working at a real hedge fund instead of a research firm.

Nordstrom is pretty conservative at delivering guidance based on its history. They guided 35%-37% revenue gain for fiscal 2021 but delivered 39%. So when they forecast 3.15-3.5 eps, it actually has some credit. Plus, with things opening up and everyone going back to office, i.e. even google is mandating employees going back on April 4, things look pretty good for them. Don't forget about the restart of the dividend post March audit; if things are not looking definite, the company just wouldn't do that.

[SFBay Investor]

Nordstrom crushed earnings and is increasingly resolving the supply problems that had impacted the prior earnings report. I think the stock easily goes to the low 30’s a share over the next 1-6 months. I think analysts just don’t know when to admit they were wrong and neither do the shorts who are calling out this name as a potential target.

[vireoman]

I'm taking the opposite side of that bet, but we'll see how the economy pans out this year.