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How Analysts Reacted to Macy’s Fiscal Q2 2018 Results

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Aug. 17 2018, Updated 3:02 p.m. ET

Analysts’ reaction

Wall Street analysts revised their price target for Macy’s (M) after the company reported its fiscal second quarter[1. fiscal Q2 2018 ended August 4] results on August 15. Although Macy’s beat analysts’ expectations, investors weren’t happy with the decline in the company’s fiscal second-quarter sales after two consecutive quarters of sales growth. Macy’s stock declined 15.9% on August 15 but recovered 1.9% on August 16.

On August 15, Jefferies raised its price target for Macy’s stock to $35 from $30. On August 16, J.P. Morgan lowered its price target to $40 from $43. UBS cut its price target to $38 from $39. Cowen and Company increased its price target to $37 from $35.

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YTD movement

On August 16, Macy’s stock rose 42.2% on a YTD (year-to-date) basis. In comparison, Nordstrom (JWN), Kohl’s (KSS), and JCPenney (JCP) have risen 10.3%, 37.8%, and -44.3%, respectively, on a YTD basis. 

As of August 16, the S&P 500 has risen 6.2% since the start of 2018. Macy’s stock has been on a high since the company announced improved sales for the fiscal fourth quarter of 2017 and the fiscal first quarter.

The company has been working to improve its performance through its North Star growth strategy, focus on its beauty business, expansion in its off-price space, and cost-reduction efforts. However, competition from online retailers and discount retailers is denting the company’s top line and posing a major roadblock in its turnaround efforts.

On August 16, the average analysts’ one-year price target for Macy’s stock was $36.23, which indicates a potential upside of 1.2%. On August 16, 12 analysts had a “hold” rating for Macy’s stock. Four analysts had a “buy” recommendation, and two analysts had a “sell” rating.

In the next part of this series, we’ll discuss Macy’s fiscal second-quarter sales in detail.

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