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Could Nordstrom’s Fourth-Quarter Results Beat Expectations?

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Stock down

Nordstrom (JWN) is set to declare its fiscal 2018 fourth-quarter[1.ended February 2] results after markets close on February 28. The upscale department store beat Wall Street’s revenue and earnings expectations in each of fiscal 2018’s first three quarters. As of yesterday, Nordstrom stock had fallen 3.9% year-to-date. The company’s stock has been in the red since it announced weak holiday sales on January 15.

Macy’s (M) and JCPenney’s (JCP) holiday sales also disappointed, reflecting intense competition from online retailers and off-price retailers. As of yesterday, Macy’s was down 18.2% year-to-date, while JCPenney had risen 17.3%.

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Analysts’ price targets

Nordstrom’s holiday sales, which reflected weakness in its full-price business, prompting several downward target price revisions for its stock.

  • On January 16, Credit Suisse lowered its price target to $50 from $55. Telsey Advisory lowered it to $72 from $56 and adjusted its rating to “market perform” from “outperform.”
  • On January 17, JPMorgan Chase lowered its price target to $41 from $51.
  • On January 26, Cowen lowered its price target to $49 from $56.
  • On January 29, RBC Capital Markets lowered its price target to $50 from $54.
  • On February 22, JPMorgan Chase again cut its price target, to $40 from $41.

As of yesterday, analysts’ average 12-month price target for Nordstrom stock was $51.27, which implies a 14.4% upside. Of the 24 analysts covering Nordstrom stock, 19 (79%) recommend “hold,” three recommend “buy,” and two recommend ”sell.” They expect Nordstrom’s revenue to fall year-over-year in the fourth quarter, which we’ll discuss next.

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