Macy's, Inc. (NYSE:M) already had a Sell rating from analysts at UBS. Now, with the firm expecting worsening macro conditions, the firm is lowering its price target to $12 from $12.75.
“We see 25% downside to our prrice target,” analysts wrote. “We believe macro forces will cause the consumer spending environment to slow and this will negatively impact Macy's earnings. We anticipate weaker-than-expected sales growth and margin compression will cause M to miss Street EPS forecasts, pressuring its stock price.”
In fact, UBS’ fiscal 2023 EPS estimate is 36% below the Street’s consensus.
“Looking into FY24, we believe the market is underestimating the pressure on M earnings from share loss as consumers migrate to online pureplay channels, retailers with better value-for-money propositions such as TJX, and brands' own stores and websites.”
Ultimately, UBS doesn’t believe Macy’s share price, which traded 2.5% lower Friday afternoon at $15.61, has baked in the likelihood of a recession.
“The question many are asking is if the stock’s ~4x P/E indicates the market has fully priced in a recession. We believe the answer is no,” analysts wrote.
“... In other words, as long as Macy's same-store sales growth trend decelerates, the stock is likely to fall, even if the stock's valuation looks low.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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