On Wednesday, CFRA adjusted its price target on Macy's (NYSE:M) shares, raising it from $13.00 to $15.00, while maintaining a Hold rating on the stock. According to InvestingPro data, the stock currently trades below its Fair Value, suggesting potential upside opportunity despite its high volatility (Beta 2.13).
The revision reflects the firm's assessment that Macy's will continue to trade close to its historical averages, amidst persistent challenges faced by the department store sector.
The firm lowered its fiscal year 2025 (FY25) earnings per share (EPS) estimate by $0.15 to $2.50 and reduced the fiscal year 2026 (FY26) EPS estimate by $0.30 to $2.50. The new price target is based on a 6.0x multiple of the revised FY26 January EPS estimate, situated between Macy's three- and five-year average forward price-to-earnings (P/E) multiples.
InvestingPro analysis reveals the company maintains a strong financial health score of 2.54/5 ("GOOD"), with liquid assets exceeding short-term obligations (Current ratio: 1.48).
Macy's reported a normalized third-quarter EPS of $0.04, which matched consensus estimates, on revenues of $4.9 billion compared to the expected $5.0 billion. This figure was $24 million above estimates. Breaking down the performance by brand, Macy's net sales saw a 3.1% year-over-year decline, while Bloomingdale's revenues enjoyed a 1.4% increase, and Bluemercury's sales rose by 3.2%.
The company has updated its full-year guidance, now anticipating an EPS range of $2.25 to $2.50, which is below the previously issued guidance. However, Macy's expects revenue to exceed prior forecasts. The third-quarter gross margin decreased by 60 basis points year-over-year to 39.6%, influenced by a shift in product mix and the transition to cost accounting.
CFRA remains neutral on Macy's stock, citing the ongoing decline in the flagship brand's performance as a significant factor in its rating decision. The firm's stance indicates a cautious outlook on the stock's near-term growth prospects within the context of the broader industry's challenges.
Notable for income investors, Macy's offers a 4.16% dividend yield and has maintained dividend payments for 22 consecutive years. For deeper insights into Macy's financial health and growth prospects, access the comprehensive Pro Research Report available on InvestingPro, which provides detailed analysis of this and 1,400+ other US stocks.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.