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UBS bearish on Macy's stock amid EPS guidance raise

EditorEmilio Ghigini
Published 22/05/2024, 08:22 pm
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On Wednesday, UBS reaffirmed its Sell rating on Macy's (NYSE:M) stock, with a steady price target of $10.00. The department store chain has updated its fiscal year 2024 adjusted earnings per share (EPS) guidance, raising it to a range of $2.55 to $2.90, up from the previous forecast of $2.45 to $2.85. This adjustment represents a 3% increase at the midpoint of the guidance.

Macy's also revised its revenue projections for FY24, now expecting between $22.3 billion and $22.9 billion, a slight increase from the former range of $22.2 billion to $22.9 billion.

This new forecast compares to the market consensus of $22.48 billion. The improved revenue outlook is attributed to modestly better same store sales and credit revenue expectations.

The company, however, is adjusting its gross margin forecast for the fiscal year downward. Macy's now anticipates a gross margin of approximately 39.0% to 39.3%, compared to its previous estimate of 39.2% to 39.5%. This revision reflects a more conservative expectation for profit margins.

In addition to the annual forecasts, Macy's has provided guidance for the second quarter adjusted EPS, setting it at $0.25 to $0.33. This projection is above the analysts' estimates, which had an average expectation of $0.21 for the same period.

Despite the raised guidance by Macy's, UBS's outlook on the company's stock remains unchanged. The firm's Sell rating persists, with the price target firmly set at $10.00, indicating that the analyst sees limited upside potential for the stock at this time.

InvestingPro Insights

As Macy's navigates its financial journey, real-time data from InvestingPro provides a deeper perspective on the company's standing. With a market capitalization of $5.55 billion, Macy's is a significant player in the retail sector. The adjusted P/E ratio as of the last twelve months stands at 6.16, suggesting that investors are paying less for each dollar of earnings compared to the industry's higher multiples. This could be a sign of the market's perception of the company's earnings potential or a reflection of its current undervaluation.

InvestingPro Tips highlight that Macy's is expected to see net income growth this year, which aligns with the company's own raised EPS guidance. Additionally, the company has a long-standing history of dividend payments, with 22 consecutive years of distributions to its shareholders. The dividend yield as of the previous year was 3.46%, with a notable dividend growth of 10.29% in the last twelve months, rewarding long-term investors. The company's large price uptick over the last six months of 37.61% also reflects positive market sentiment.

For readers looking to delve deeper into Macy's financials and future prospects, InvestingPro offers a wealth of additional tips and metrics. Utilize coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the 6 additional InvestingPro Tips available for Macy's at https://www.investing.com/pro/M. These insights could prove invaluable for making informed investment decisions in the dynamic retail landscape.

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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