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On Tuesday, CFRA analyst Zachary Warring upgraded Nordstrom (NYSE:JWN) stock from Sell to Hold and increased the price target to $24.00, up from the previous $20.00. The revision in the stock’s outlook is rooted in the anticipation of improved operating metrics for the company. The stock currently trades at $24.30, near its 52-week high of $24.99, with InvestingPro analysis indicating the stock is slightly undervalued based on its proprietary Fair Value model.
Warring’s analysis sets the new price target based on a 12.0x multiple of the projected fiscal year 2026 (ending in January) earnings per share (EPS), which is positioned between Nordstrom’s three- and five-year average forward price-to-earnings (P/E) multiples. The CFRA analyst maintains a fiscal year 2026 EPS estimate of $2.00 and has initiated a fiscal year 2027 EPS estimate at the same level. Currently, Nordstrom trades at a P/E ratio of 15.18x, with trailing twelve-month revenue of $15.11 billion.
Nordstrom reported normalized earnings for the fourth quarter of $1.10 per share, surpassing consensus estimates by $0.17, on revenues of $4.32 billion, which fell slightly short of expectations by $5 million. InvestingPro data shows the company maintains a strong financial health score of 2.54, rated as "GOOD," with several positive indicators available to subscribers. The company also revealed that it is set to go private, following an acquisition by the Nordstrom Family and El Puerto de Liverpool, S.A.B. de C.V. in December, with a cash offer of $24.25 per share, a deal expected to close within the year 2025.
The retailer experienced a 4.7% year-over-year increase in comparable store sales during the fourth quarter. Additionally, the quarter saw an expansion in gross margin by 290 basis points year-over-year to 37.3%, attributed to better shrinkage metrics and improved markdowns.
The upgrade in rating to Hold reflects CFRA’s stance on Nordstrom’s fair valuation and the forthcoming private transaction.
In other recent news, Nordstrom Inc . has announced the departure of its Chief Financial Officer, Catherine R. Smith, who plans to resign following the filing of the company’s annual report. This development coincides with Nordstrom’s ongoing merger process with Norse Holdings, Inc., which includes executive retention bonuses to ensure stability during the transition. As part of the merger, Nordstrom will become a wholly-owned subsidiary, with retention bonuses structured to be paid in installments. Additionally, there are reports that the Nordstrom family and El Puerto de Liverpool are nearing an agreement to purchase the remaining shares of Nordstrom, a deal that has generated significant investor interest. In another executive change, Stacy Brown-Philpot has resigned from Nordstrom’s Board of Directors for personal reasons, resulting in a reduction in the board’s size. Meanwhile, Starbucks Corporation (NASDAQ:SBUX) has appointed Cathy R. Smith as its new Chief Financial Officer, effective soon. Smith’s extensive experience includes previous roles at Nordstrom and Target Corporation (NYSE:TGT). Starbucks CEO Brian Niccol expressed gratitude to outgoing CFO Rachel Ruggeri for her significant contributions to the company.
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