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Investing.com - UBS maintained its Sell rating and $6.00 price target on Macy’s (NYSE:M) stock in a research note released Friday. The stock currently trades at $12.52, with analyst targets ranging from $6.00 to $23.11, according to InvestingPro data.
The investment firm expects Macy’s to continue losing market share due to significant challenges compared to competitors in price, product, and service areas. UBS forecasts earnings will remain under pressure, projecting a negative 13% five-year earnings per share compound annual growth rate from fiscal year 2024 through 2029. This outlook aligns with InvestingPro data showing an expected 8% revenue decline this year, though the stock trades at an attractive 6.4x earnings multiple with an 18% free cash flow yield.
UBS believes these ongoing earnings challenges will continue to weigh on Macy’s price-to-earnings multiple, supporting the firm’s bearish outlook on the stock.
The research note acknowledged that new Macy’s CEO Tony Spring has brought energy to the company and is implementing a strategy focused on elevated service, potentially creating a sustainable niche against off-price retailers and online competitors.
Despite recognizing the potential merits of the new approach, UBS indicated it needs more evidence that Macy’s can successfully execute this strategy before reconsidering its negative rating on the stock.
In other recent news, Macy’s reported first-quarter 2025 financial results that exceeded Wall Street expectations, with an adjusted earnings per share (EPS) of $0.16 and revenue of $4.6 billion, both surpassing forecasts. Despite a 1.2% decline in comparable sales, this was better than the expected drop of 2.5% to 4.5%. Analysts have adjusted their outlooks accordingly; TD Cowen raised Macy’s stock target to $13, noting the company’s effective management of expenses, while Jefferies lowered its target to $14.50 but maintained a Buy rating. Citi also increased its price target to $12, highlighting improved sales trends and stronger-than-expected consumer demand. However, JPMorgan reduced its target to $12, citing ongoing macroeconomic uncertainties and a cautious earnings outlook for the year.
Macy’s management has revised its full-year 2025 EPS guidance downward to a range of $1.60 to $2.00, reflecting potential challenges from tariffs and consumer spending trends. The company is taking strategic steps to navigate these challenges, including introducing new brands and expanding store locations. Analysts note that Macy’s is not considered expensive based on current estimates, but the risk/reward ratio remains balanced due to the volatile retail landscape. The company’s strategy includes flexibility in pricing to capture market share and ongoing modernization efforts in its stores. Macy’s projects net sales between $21.0 billion and $21.4 billion for the full year, with a cautious outlook on consumer spending and tariff impacts.
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