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Will Nordstrom’s First-Quarter Results Help Its Stock Recover?

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May. 17 2019, Published 7:08 a.m. ET

Q1 results

Nordstrom (JWN) plans to announce its results for the first quarter of fiscal 2019 after the financial markets close on May 21. Nordstrom stock was down 20.8% on a year-to-date basis as of May 16. The stock of the upscale department store chain has declined about 22% since the announcement of its fourth-quarter results in February. Macy’s (M) and Kohl’s (KSS) have declined 27.8% and 3.9%, respectively, on a YTD basis, while JCPenney stock was up 14.4% as of May 16.

Nordstrom lagged analysts’ revenue expectations for the fourth quarter of fiscal 2018 but exceeded earnings expectations. The company’s top-line growth was adversely impacted by weakness in its full-price business.

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Analysts’ recommendations

On April 10, KeyBanc upgraded its rating for Nordstrom stock to “overweight” from “sector weight” backed by the company’s strong e-commerce sales. KeyBanc assigned Nordstrom a stock price target of $55.

On May 9, Wedbush downgraded Nordstrom stock to “neutral” from “outperform” and lowered its price target to $40.00 from $65.00. Wedbush is optimistic about Nordstrom’s prospects over the long term but does not see a strong run in the near term due to deterioration in the revenue growth rate, increased promotional trends, and margin pressure.

On May 10, Cowen and Company cut its price target for Nordstrom stock to $44 from $49. J.P. Morgan lowered its price target to $40 from $42.

As of May 16, the 12-month price target for Nordstrom stock was $47.31, which reflects an upside of about 28%. Nordstrom had a “hold” recommendation from 17 out of 23 analysts as of May 16 and a “buy” rating from three analysts. The department store chain had a “sell” rating from three analysts.

The upcoming first-quarter results on May 21 are likely to cause further revisions to Nordstrom’s price target. Analysts expect Nordstrom’s revenue to rise 0.4% to $3.57 billion while adjusted EPS are expected to fall 17.6% to $0.42 in the first quarter of fiscal 2019.

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