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On Friday, TD Cowen updated its outlook on Macy’s (NYSE:M) shares, raising the price target from $11.00 to $13.00 while maintaining a Hold rating. The adjustment followed Macy’s reported earnings per share (EPS) of $0.16 for the first quarter, surpassing the consensus estimate by approximately 7%. The performance exceeded expectations with a smaller decline in owned comparable sales than anticipated and effective management of selling, general, and administrative expenses (SG&A).
Macy’s owned comparable sales for the quarter reported a decrease of 2%, which was more favorable than the expected 3.9% decline, though InvestingPro analysis shows a broader revenue decline of 3.77% over the last twelve months. This represented a slight deceleration from the fourth quarter. Despite the better-than-expected quarterly results, Macy’s has provided a more conservative earnings guidance for the fiscal year 2025, setting the midpoint at $1.80 per share. This represents a 16% decrease from the previous forecast of $2.15 per share. The market’s reaction to the news was muted, with Macy’s stock trading flat, which may indicate that the lowered guidance was already factored into investor expectations. The company maintains strong liquidity with a current ratio of 1.43, suggesting adequate resources to meet short-term obligations.
The research firm remains cautious about Macy’s future performance, closely observing the company’s progress with its 350 go-forward stores, which are expected to benefit from modernization efforts, improved stock availability, personalized marketing strategies, and additional staffing. These initiatives are part of Macy’s strategy to bolster its retail operations amidst a challenging economic landscape.
TD Cowen anticipates a non-linear progression in comparable sales, with second-quarter guidance for 2025 suggesting a range between a 1.5% decline and a 0.5% increase, which is considered more favorable due to easier year-over-year comparisons. However, the full-year guidance for 2025 is more guarded, projecting a decrease in comparable sales of between 2.0% and 0.5%, reflecting concerns over macroeconomic uncertainties, including the impact of tariffs.
The revised price target of $13.00 is based on projected EPS of $2.08 for the fiscal year 2026 and a price-to-earnings (P/E) ratio of 6.5 times. This adjustment reflects TD Cowen’s analysis of Macy’s financial outlook and market position, factoring in both the recent quarterly performance and the broader economic challenges that may influence the company’s future earnings potential. InvestingPro data reveals that Macy’s offers a substantial 6.11% dividend yield and demonstrates strong free cash flow generation, though investors should note its higher volatility with a beta of 1.79. For deeper insights into Macy’s valuation and financial health metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Macy’s Inc. reported its first-quarter financial results for 2025, surpassing Wall Street expectations with an adjusted diluted earnings per share (EPS) of $0.16, compared to the forecast of $0.14. The company’s revenue also exceeded projections, reaching $4.6 billion against the anticipated $4.4 billion. Analysts have responded to these results with varied adjustments to their price targets. Citi analyst Paul Lejuez raised Macy’s stock price target to $12.00, up from $11.00, while maintaining a Neutral rating, citing improved sales trends. Conversely, Jefferies analyst Ashley Helgans lowered the price target to $14.50 from $17.00 but kept a Buy rating, highlighting the company’s strategic adjustments. JPMorgan’s Matthew Boss also reduced the price target to $12.00 from $13.00, maintaining a Neutral stance, noting the company’s slight EPS beat of $0.16 over the consensus estimate of $0.15. Macy’s management has revised the full-year 2025 EPS outlook downward to a range of $1.60 to $2.00, reflecting potential impacts from tariffs and anticipated declines in same-store sales. Despite these challenges, Macy’s continues to implement strategic changes, including reimagining store locations and introducing new brands, which have contributed to its better-than-expected performance.
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