Telsey cuts Kohl’s stock target to $10, keeps rating

Wednesday, Telsey Advisory Group lowered its price target on Kohl’s Corporation (NYSE:KSS) shares to $10.00 from $13.00, while maintaining a Market Perform rating. The adjustment follows Kohl’s fiscal year-end results, which showed a solid earnings per share (EPS) beat and sales figures slightly above consensus. The company’s effective management of selling, general, and administrative expenses (SG&A) helped to counterbalance a significant gross margin shortfall.

Kohl’s new CEO, Ashley Buchanan, has prioritized enhancing product offerings, value, and customer experience for the upcoming fiscal year. Despite these initiatives, the company’s forecast for FY25 was disappointing, falling short of already modest market expectations. According to InvestingPro data, revenue declined 4.33% in the last twelve months, with analysts expecting further sales decline this year. Analysts at Telsey have expressed concerns regarding the timeline and feasibility of the retailer’s turnaround plans, especially given the current unpredictable economic environment.

Telsey analysts have highlighted the need for Kohl’s to regain customer loyalty and improve its product assortment, value proposition, and overall customer experience. The path to achieving these improvements is seen as challenging, with the company having to navigate several years of inconsistent performance. InvestingPro analysis indicates the stock is currently undervalued, trading at a low Price/Book ratio of 0.27x and offering a significant dividend yield. The firm’s revised price target of $10 is based on a 4.8x multiple applied to a two-year forward EBITDA estimate of $1.13 billion. This multiple is slightly below the five-year next twelve months (NTM) average of 5.1x.

The report from Telsey reflects a cautious outlook for Kohl’s, as the retailer attempts to stabilize its operations and return to higher profitability. The company’s strategic focus areas for the fiscal year have been set, but the ability to execute on these plans remains uncertain. Kohl’s will continue to work towards improving its financial and operational metrics in a bid to deliver on its promises to shareholders and customers alike. For deeper insights into Kohl’s valuation and future prospects, InvestingPro subscribers can access comprehensive Pro Research Reports with expert analysis and over 30 key financial metrics.

In other recent news, Kohl’s Corporation announced its fourth-quarter 2024 earnings, reporting an adjusted earnings per share (EPS) of $0.95, which surpassed the analysts’ forecast of $0.77. The company met revenue expectations, posting $5.18 billion for the quarter. Despite these positive earnings results, Kohl’s stock saw a significant decline in pre-market trading. The company plans to reduce its selling, general, and administrative (SG&A) expenses by 3.5% to 5% in 2025 as part of its cost-cutting measures. Analysts from Baird have noted the company’s efforts to address ongoing consumer spending challenges and the strategic shifts being made to stabilize investor confidence. Kohl’s also projects a net sales decline of 5-7% in 2025, with comparable sales expected to decrease by 4-6%. The company closed 27 underperforming stores and one e-commerce fulfillment center as part of its efforts to increase efficiency. These developments reflect Kohl’s ongoing strategy to navigate a challenging retail environment and improve its financial health.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.