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Kohl’s downgraded, broader department store targets slashed at BofA

Kohl"s Department Stores Receives Unsolicited Bid From Hedge Fund Starboard Value LP

Justin Sullivan/Getty Images News

Weakening consumer demand drove Bank of America analyst Lorraine Hutchinson to rein in estimates across department store retailers on Thursday.

In a note to clients reassessing the industry, Hutchinson reduced full-year earnings estimates for the stocks

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mickeystoysz16 profile picture
I am long Macy's since 2020 with an average cost basis in the mid single digits. I did not sell at the top, instead collecting the reinstated dividends and profiting from hedges on the way down. I just recently started adding again for the first time adding shares at $17 with put protection. The current buyback authorization remaining is $1.4B. Below $18 share management can buyback 77M or more shares. This would leave only 200M shares outstanding.
If M were to reach TTM Rev of $30 by 2026 and a 5% net margin assumes a $1.5B net profit or $7.5 share earnings post buy back. A market multiple of 8 for macys is $60/share target base case. My bear case would be $4 and a 6 multiple at $24 and the bull case is $2B net income and $10 eps with an 8 multiple for $80 share.
This makes Macy's undervalued at even the bear case scenario. I am long Macys and will continue to accumulate and add under $24.

This analyst is just wrong about Macy's and why I don't trust ANY of them.
@mickeystoysz16 they are just journalists, they would never follow their own advice
A Contrarian profile picture
@mickeystoysz16 I also bought at mid single digits and sold almost everything at 30+. No complaints. I started buying again.
@mickeystoysz16 If you are buying Macys, you are better off buying Kohls (KSS). They execute better and has off mall locations. Their parking lots can be converted into EV charging stations while customers shop. And they are spread everywhere rather than being concentrated more in deteriorating New York. They have buybacks as well and Sephora partnership is going to drive traffic and new customers. Sephora kept JCPenny afloat for a very long time. Its that powerful.
Bank of America downgrades Kohl's, when it's trading at 27. It was earlier this year trading at 64. These analysts are worth their weight in gold.
Xempler profile picture
@southbuckeye Right? And cutting Macys? They're a 4 P/E with a stock buyback ongoing and a healthy balance sheet and around a 4 percent yield Their real estate holdings alone equals their market share. Yeah, retail will face a tough slog for a while but lumping all together is just lazy
@Xempler macys is just buying back stock . Lots.. then next year they will praise their balance sheet.. which is pretty good at present
Xempler profile picture
@Adam Silber That's my thesis. And next year isn't that far off.

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