Macy’s Stock: Why Most Analysts Recommend a ‘Hold’

Today at 7:09 AM ET, Macy’s (NYSE:M) stock rose 8% to $6.65 in the pre-market session. The shares rose due to positive developments about economies reopening amid the coronavirus outbreak. Earlier this week, Macy’s reopened about 270 stores. The company noted that it has witnessed higher-than-expected demand in the reopened stores.

According to a Wall Street Journal report, Macy’s “launched a funding round offering $1.1 billion in bonds to get the struggling retailer through the lockdowns enforced during the coronavirus pandemic.” The report added that the company “plans to use the proceeds of the bond sale to repay borrowings under a current facility. It will issue senior notes, set to mature in 2025, that will be secured by 35 stores and 10 distribution centers.” Macy’s should have significant liquidity to fund its business operations and pay off debt maturities in 2020 and 2021.

First-quarter performance

Last week, Macy’s provided preliminary financial results for the first quarter of fiscal 2020, which ended May 2. In the first quarter, the company expects total revenue between $3.00 billion and $3.03 billion. The company also expects its operating loss to be $905 million–$1.11 billion. Read Macy’s Sees up to $1.11 Billion Q1 Loss, COVID-19 Hurts Sales to learn more.

Wall Street analysts expect Macy’s to post an EPS of -$2.25 on sales of $3.03 billion in the first quarter. Analysts also expect the company’s revenues to fall by 23% YoY (year-over-year) in fiscal 2020 to $18.9 billion. The sales could rise to $20.8 billion in fiscal 2021. Meanwhile, the EPS will fall from $2.91 in fiscal 2019 to -$3.20 in fiscal 2020. Analysts also expect an EPS of $0.90 in fiscal 2021.

Analysts’ recommendations for Macy’s stock

Currently, ten out of 16 analysts recommend a “hold,” while six recommend a “sell.” None of the analysts recommend a “buy.” Analysts have an average target price of $6.33 on Macy’s. The target price implies a return of 2.6% based on the closing price of $6.17 on Tuesday. The consensus target price for the stock has fallen from $8.42 in April—a fall of 25%.

Stock returns

On Tuesday, Macy’s stock rose 18.4% and closed at $6.17 with a market cap of $1.9 billion. The stock has returned -70.6% in the last 12 months and 22.9% in the last month. Meanwhile, the stock is trading 40.9% above its 52-week low of $4.38 and 73.6% below its 52-week high of $23.40.

On Tuesday, Macy’s stock was trading 15.3% above its 20-day moving average of $5.35. The stock is trading 11.6% above its 50-day moving average of $5.53 and 41.0% below its 100-day moving average of $10.46.

Macy’s stock has a middle Bollinger Band level of $5.35, while its lower Bollinger Band level is $4.63. On Tuesday, Macy’s stock closed near its upper Bollinger Band level of $6.08, which indicates that it’s overbought.

On Tuesday, Kohl’s (NYSE:KSS) and Nordstrom (NYSE:JWN) stocks returned 11.3% and 7.3%, respectively.

Read Will Macy’s Survive COVID-19 or Sink Like JCPenney? and Macy’s Will Close 125 Stores amid Online Shopping Demand to learn more.