As of August 2, Nordstrom’s (JWN) stock was rated a “buy” by 25% of the 28 analysts covering the stock. The company is rated a “hold” by 57%, or 16 analysts. Five analysts rate the company a “sell.” On June 9, Guggenheim downgraded Nordstrom stock from “buy” to “neutral.” On the same day, UBS also downgraded the company’s stock from “buy” to “neutral.”
Consensus “hold” rating
The majority of the analysts have a “hold” rating for Nordstrom stock. Nordstrom and its department store peers have been struggling to deliver sales growth due to the growing strength of online retailers like Amazon (AMZN). However, Nordstrom’s top-line growth has been better than that of peers like Macy’s (M) and Kohl’s (KSS).
Nordstrom’s overall revenue has fallen in only one quarter, fiscal 2Q16, over the past 31 quarters. Macy’s and Kohl’s sales have fallen for the past nine and five consecutive quarters, respectively. Nordstrom’s off-price Rack business and its online channels have helped it in delivering better sales growth.
However, the company’s full-line stores sales growth continues to be unimpressive. Nordstrom currently runs more off-price stores than full-line stores. As at the end of fiscal 1Q17, which ended on April 29, 2017, Nordstrom operated 117 full-line stores in the US, five full-line stores in Canada, 220 Nordstrom Rack stores, and 11 other brand stores including Jeffrey boutiques and Last Chance clearance stores.
12-month price target
As of August 2, the 12-month price target for Nordstrom’s stock is $46. When compared to the closing stock price of $46.49 on August 2, the average 12-month price target reflects a downside potential of 1.1%. The company’s upcoming fiscal 2Q17 results on August 10 might result in a revision in its 12-month price target.
We’ll discuss Nordstrom’s valuations in the concluding part of this series.