UBS maintains sell rating on Kohl’s stock with $5 target

On Thursday, UBS analyst Jay Sole reaffirmed a Sell rating on Kohl’s shares (NYSE: KSS) with a steady price target of $5.00, representing significant downside from the current price of $6.58. The analysis followed a recent meeting with Kohl’s management on April 2, 2025, after which Sole expressed continued concerns about the retailer’s competitive position in terms of pricing, products, and services. According to InvestingPro data, seven analysts have recently revised their earnings expectations downward for the upcoming period.

Sole acknowledged the company’s efforts under new management to implement growth initiatives swiftly but expressed skepticism regarding their effectiveness in curbing Kohl’s market share losses, particularly to the Off-Price retail segment. The concerns appear justified, as revenue declined 7.2% in the last twelve months, with analysts expecting further sales decline this year. UBS forecasts a roughly 12% five-year earnings per share (EPS) compound annual growth rate (CAGR) decline for Kohl’s.

The analyst anticipates that Kohl’s earnings will fall short of expectations in the near term, which he believes will place downward pressure on the company’s stock price, potentially leading it toward UBS’s $5 price target. Despite trading below InvestingPro’s Fair Value estimate, the stock has already fallen over 64% in the past year. The Sell rating and price target suggest that UBS does not see a positive outlook for Kohl’s stock in the foreseeable future.

The reaffirmed Sell rating and price target were based on the analysis of the company’s current strategies and market challenges. While Kohl’s maintains a significant dividend yield of 5.8% and has sustained dividend payments for 15 consecutive years, UBS’s stance indicates a cautious perspective on Kohl’s potential to navigate the competitive retail landscape successfully. For deeper insights into Kohl’s financial health and future prospects, access the comprehensive Pro Research Report available on InvestingPro.

In other recent news, Kohl’s Corporation (NYSE:KSS) reported a notable increase in its fourth-quarter earnings per share (EPS) for fiscal year 2024, achieving $0.95 per share, which exceeded the forecast of $0.73. Despite this earnings beat, the company experienced a decline in comparable store sales by 6.7%, slightly better than the anticipated 6.8% decline. Revenue for the quarter matched expectations at $5.18 billion. However, the company’s guidance for fiscal year 2025 projects a less optimistic outlook, with EPS expected to range between $0.10 and $0.60, significantly below the consensus of $1.22.

In response to these developments, several analysts have adjusted their outlooks on Kohl’s. UBS reduced its price target for Kohl’s shares to $5 from $10, maintaining a Sell rating, while Citi and TD Cowen both lowered their price targets to $8, with Citi maintaining a Neutral stance and TD Cowen a Hold rating. Telsey Advisory Group also revised its price target to $10 from $13, keeping a Market Perform rating. Analysts cited ongoing challenges in consumer spending and the need for Kohl’s to adapt its strategies to improve its financial position.

Kohl’s management has announced a 75% reduction in its quarterly dividend, now set at 12.5 cents, as part of its strategy to navigate the current economic environment. The company is focusing on reinvesting in product categories and private brands, simplifying its value-messaging, and modernizing store layouts to drive future growth. Despite these efforts, analysts remain cautious about the timeline and feasibility of Kohl’s turnaround plans.

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