BofA update shows where active managers are putting money
Investing.com - UBS raised its price target on Kohl’s (NYSE:KSS) to $4.50 from $4.00 on Thursday, while maintaining its Sell rating on the department store retailer. According to InvestingPro data, the stock has shown significant momentum with a 45.8% return over the past six months, despite trading at a P/E ratio of 14.7x.
The price target adjustment still implies a 70% downside from the current stock price, according to UBS. The firm cited concerns that the market is underestimating the impact on Kohl’s earnings from share loss to other retail channels, particularly the Off-Price channel. InvestingPro analysis shows the company maintains a Fair dividend yield of 3.1% and has sustained dividend payments for 15 consecutive years, though revenue declined 7% in the last twelve months.
UBS noted that while Kohl’s second-quarter results exceeded expectations, the retailer reported declining comparable sales for the 15th consecutive quarter. The firm emphasized that Kohl’s is still in the early stages of a turnaround plan, with no meaningful improvement expected until at least fiscal year 2026.
The research firm projected that consensus earnings-per-share estimates will likely decrease over the next twelve months due to several factors. These include weak sales, tariff-related cost increases, a more promotional holiday season compared to the previous year, and fixed cost deleverage pressuring earnings.
UBS concluded that these challenges would likely keep investor sentiment subdued and drive the stock toward its revised $4.50 price target.
In other recent news, Kohl’s reported its second-quarter earnings for 2025, delivering an adjusted earnings per share (EPS) of $0.56, which significantly surpassed the forecasted $0.30. This marks an 86.67% surprise in EPS, primarily due to lower selling, general, and administrative expenses and increased credit revenue. However, the company’s revenue slightly missed expectations, coming in at $3.35 billion compared to the anticipated $3.37 billion.
Following these results, BofA Securities raised its price target for Kohl’s from $7.00 to $8.40, maintaining an Underperform rating. Similarly, Evercore ISI increased its price target to $13.00 from $8.00, while keeping an "In Line" rating. Evercore ISI highlighted Kohl’s solid performance against low expectations, noting the company’s effective self-help initiatives. These initiatives include revitalizing proprietary brands and expanding coupon promotions to previously excluded brands.
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