Macy’s upgraded to Overweight at JPMorgan following fireside chat

Macy’s upgraded to Overweight at JPMorgan following fireside chat
© Reuters. Macy’s (M) to overweight at J.P. Morgan following fireside chat

By Michael Elkins

JPMorgan upgraded Macy’s (NYSE:) to an Overweight rating (from Neutral) and raised their price target on the stock to $29.00 (from $28.00) after hosting management for a Fireside Chat and group meetings.

Analysts wrote in a note, “The key takeaway from our meetings was clear confidence in FY23’s top/bottom-line plan (including 1Q despite industry-wide March softness by our work) and multi-year low-double-digit EBITDA margin profile with 5 “self-help” growth vectors (private label, off-mall store expansion, digital marketplace, luxury brands, personalization) driving a return to low-single-digit top-line growth and incremental EBITDA margin expansion YOY in FY24.”

The analysts also note that they see a favorable risk/reward setup with today’s 2x EBITDA valuation corresponding with the VSCO takeout multiple in 2020 relative to the 5x Distressed retail pre-pandemic multiple average, which on JPMorgan’s model would translate to a $43 equity value, noting $1.45 of incremental EPS power vs. the model.

Shares of M are up 4.57% in premarket trading on Monday.



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